What will Cellcom’s electricity reform mean for consumers?
Many Israelis were delighted but confused this week when Cellcom, Israel’s largest cellular services company, announced it was entering the electricity field. The company said on Monday it will begin supplying electricity to private and business customers through Cellcom Energy, its new joint venture with Meshek Energy.
Cellcom CEO Avi Gabay and others referred to the announcement as a revolution, while many were unaware that a radical change to the electricity field, which is dominated by government-owned Israel Electric Corp (IEC), was even on the horizon.
In 2018, the government approved a plan to reform the electricity sector by introducing competition and forcing IEC to streamline its operations. The main goal was to move much of the production to the hands of private companies and reduce IEC’s market share from 70% to 30% of Israeli households and businesses.
The reform had been on the national agenda for decades, but had constantly been held up by the demands of the Histadrut labor union regarding labor agreements. Under the agreement that was signed at the time, IEC was to cut 25% of its workforce, some 2,200 jobs, over the course of eight years.
IEC is consistently ranked one of the best places to work in Israel, and workers receive some of the highest salaries in the country, an average of some NIS 28,000 per month. They also famously enjoyed free electricity in their homes until that perk was canceled in 2012. The electricity reform was intended to cut some of those costs, as well as sell off some of IEC’s power plants to private sector companies to make the industry more efficient.
The reform is expected to completely change the face of
Israel’s electricity sector, making it more competitive, more innovative and more cost-effective for the customer. A growing portion of the country’s energy will be produced using renewable sources, while most of the vehicles sold in Israel will be electric or hybrid.
Cellcom Energy said its customers would enjoy significant discounts on their electricity bills, as well as a long list of benefits in electricity and energy, subject to obtaining the relevant licenses. The Electricity Authority’s pilot for the new program kicks off in July, and the company’s first customers are expected to begin service around September.
Households currently pay IEC an average of NIS 6,000 a year and would save about NIS 500 a year using Cellcom Energy, while a medium-sized business that pays NIS 50,000 a year would save up to NIS 4,000 a year, the company said. Customers would also receive a set of “smart” sockets and switches that would give them greater control over power consumption and their hot-water heaters, as well as information about their energy consumption history and the relative costs of running individual electric devices.
The company also said it would offer a package of benefits for electric vehicle owners, and will offer incentives to encourage customers to install renewable-energy products like solar panels.
Following Cellcom’s announcement, Esco Israel, a 15-year old company focused on increasing energy efficiency and savings of power consumption, said it was also applying for a license to provide electricity.