In a surprise move today, the Natural Gas Authority, a small and anonymous regulator, has taken measures that even the large and strong Ministry of Finance has only threatened to do but would not dare to implement. It has only issued a draft document that will be subject to a hearing but the incendiary pair of words “pro-rata” have exploded for the first time from a government authority.
The arrangement being proposed by the Natural Gas Authority is problematic. In the name of parity, the Israeli consumer will pay more for his electricity bill. It is not yet clear if the Public Utilities Authority (Electricity) will allow this while consumers may petition the Supreme Court against the decision.
The private electricity producers that have already signed agreements for Tamar gas are also likely to be hurt. Whether Dalia Power Energies Ltd, which has already survived seven rounds of decisions by regulators, can close financing is highly questionable. Above and beyond reducing the amount of gas they need, Israel Electric Corporation (IEC) (TASE: ELEC.B22) and the energy producers will be subsidizing the small users and medium-sized enterprises.
More uncertainty in the economy
Equality in allocations for the gas means more uncertainty in the economy, and another painful bite by the regulators out of the principle of respecting agreements. And this time from the office of the minister who raises these principles in every speech he makes…Read More>>