Boycotts, Lawsuit to Prevent New Power Rate Hike

Boycotts against dairy products have paid off, as companies have cut prices on products. Will boycotts work for electricity, too?

David Lev,

Electricity Grid
Electricity Grid
Israel news photo: Hillel Meir

Boycotts against dairy products have paid off, as Tnuva and other dairy concerns have cut prices on dozens of products. So, will what worked for cottage cheese work for electricity?

Itzik Alrov, the mastermind of the cottage cheese boycott, which arguably set off the summer's protests against the high cost of living that led to the convening and decision paper of the Trachtenberg Committee's report on lowering the cost of living in Israel, believes that it can.

Alrov this week called for Israelis to “boycott” the Israel Electric Company. The boycott does not necessarily entail turning off appliances, though; Alrov is calling on IEC customers to postpone payment of their bills, in the hope of creating a “cash crisis” at the IEC that will make it clear how angry customers are at ever-rising prices.

Just a few months ago, the IEC hiked rates by about 9.89%, saying that higher oil costs and the cutoff of gas from Egypt – due to terrorist activity that shut the flow of natural gas from Sinai to Israel for a long period - required them to charge higher rates. And this weekend, the IEC announced, it is raising rates by another 4.72%, again attributed to Egyptian supply problems.

IEC workers are generally the highest paid in the country on average, Alrov says, and the public utility commission that is supposed to look out for the public's welfare has been toothless, more or less routinely approving IEC rate hike requests (in its defense, officials on the commission said that the Electric Company wanted to raise the price of power by 20% in August, and that they talked IEC officials into raising rates by “only” about half).

Unlike with dairy products, there are no alternatives to buying electricity from the IEC, a state monopoly. And not paying the bill will result in a power turnoff, which consumers obviously will not stand for. But Alrov's idea is to create a short term cash crisis at the IEC; customers who don't pay their bill until its “past due” date will not have their power turned off, but instead will be charged interest (rates are very low right now) and a penalty (not very high, either). The IEC needs cash on a constant basis, and if its coffers are empty for a month or two, Alrov believes, the company will be forced to be a little more considerate of consumers.

The plan, Alrov wrote on his Facebook page, comes into effect November 11. Alrov is calling on IEC customers who have a “standing payment plan” (hora'at keva) to cancel the automatic payments they currently make to the IEC, and hold off on paying their next bill until they are dunned and threatened by the company – at which point, he says, the consumer will have made his opinion quite clear.

Trying another tack to keep costs under control, Attorney Yossi Fuchs filed a petition with the High Court Thursday demanding that this weekend's planned rate hike be prohibited. Fuchs wrote in his petition that long-suffering Israeli consumers were “counting on the court to stop the shocks of these electricity price increases.”

Fuchs added that the recent 10% rate increase was, according to the company, instituted because of the Egyptian gas shortage. However, gas is now flowing again from Sinai – and the entire point of the contract with Egypt was because it was supposed to make electricity cheaper. As such, Fuchs wrote, there is something wrong – dishonest, even – with the IEC's rate policy that needed to be examined and investigated. And until that investigation takes place, the company should not be allowed to raise prices.

In response, the IEC responded that it was not responsible for the sharp increase in natural resource prices, and that oil, coal, and gas had all gone up in price recently. In addition, the company said, any blame for rate hikes should be presented to the public utility commission, which approves those price hikes. The court is expected to rule on Fuchs' petition before the weekend.

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