Israel Electric Corp is suing a private Palestinian Arab firm for $150 million in unpaid bills, after negotiations to settle the debt collapsed, officials said on Monday.
The IEC filed suit at the Jerusalem District Court on Thursday against the Jerusalem District Electric Company for a total of 531 million shekels ($153 million/111 million euros), a company statement said.
JDECO is a private company which purchases electricity from Israel to supply to Palestinian Arab neighborhoods in Jerusalem as well as the Palestinian Authority (PA).
The IEC decided to sue after "intensive contact" with JDECO and PA officials in Ramallah failed to reach a breakthrough.
As well as supplying electricity via JDECO, Israel also caters to the PA and Gaza - despite political tensions between them, the PA's incitement campaign against Israel, and Hamas's frequent threats of genocide against Israelis.
The Ramallah-based PA also owes money to the IEC. Both the PA and JDECO ran up debts after failing to collect the full amount they are owed by their own customers.
An energy market insider told AFP that the outstanding debt of the JDECO and PA to the IEC currently stood at 1.5 billion shekels ($434 million/315 million euros) of which around two-thirds was owed by JDECO. The lawsuit only accounts for around half of that sum.
Israel's finance ministry is offsetting the PA's outstanding debt to the IEC by deducting funds from the monthly taxes it collects on behalf of the PA.
But in the case of JDECO, Israel has no mechanism for deducting monies, meaning the debt has ballooned, the source told AFP, saying that cutting off the power was not politically feasible.
Until recently, talks were under way to reach a solution, but the PA abruptly halted the negotiations after the signing of a unity deal with Hamas, the source said.
The Jerusalem District Court is to issue a directive on the case on Wednesday.
Contacted by AFP, Omar Kataneh, head of the Palestinian Power Authority,had no immediate comment on the matter.