Minister Eli Cohen on the revolution in the electricity market

A revolution of joy: Last week, Minister of Energy and Infrastructure Eli Cohen announced a revolution in the electricity sector that will allow anyone who wants to leave the electricity company and connect to a private provider. The goal: a 5-20% reduction in the household's account.

Already in June 2018, the reform in the electricity sector was launched and after a two-year pilot that ended in January 2023, the option was opened for private consumers with a smart (digital) electricity meter to change the electricity supplier.

Since there are 3.1 million electricity meters in Israel, but only about 700,000 of them are smart meters, starting in the last quarter of this year every household (even without a smart meter) will be able to connect to one of 18 suppliers who will offer discounted rates according to the nature of home consumption. Among the companies: Pazgaz, Electra Power, Bezeq, Hot, Amishragaz, Cellcom and Partner.

According to Cohen, "Precisely on days when everything becomes more expensive, electricity is discounted. We removed barriers, broke the old monopoly in the economy and helped fight the cost of living. Each resident will be able to pay less on the electricity bill, depending on the nature of their use and save between 600 and 2,400 shekels on average per year."

The reform in the electricity sector effectively abolishes the exclusive control of the Electric Company in the production and supply segments with the aim of creating competition and lowering the price paid by consumers, and on the other hand strengthens it as a natural monopoly in the transmission and distribution segments (infrastructure), with the aim of improving the quality of the electricity supply. It was decided that in the production segment, the Electric Company will sell five power plants it owns and two state-of-the-art gas plants will be built instead of coal units. In the supply segment, private companies will enter that will be able to supply electricity to consumers, and in the transmission and distribution segments, the electric company will continue to build, maintain and operate facilities and will invest in infrastructure development to the extent of at least NIS 3 billion per year.

Profound organizational change

As part of the reform, the Electric Company had to change its organizational structure: about 2,800 employees were put on early retirement, about 100 managers moved to a personal contract, and the "free electricity" benefit for new employees of the company was stopped. At the end of the process, the company's workforce will be reduced by about 25%. So how will it work?

Competition in the electricity sector encourages suppliers to produce and supply electricity in an advanced, efficient and cheaper manner. Added to this is a transparent pricing model that allows consumers to compare prices and choose the option that is affordable for them.

46 companies received a license to supply electricity, 18 of which are already active in the economy with household and business customers and offer various consumption packages. However, some of them are only now setting up the control and service centers and some are still deploying infrastructure, so the campaigns that will raise public awareness are expected only towards the summer. We will differentiate between households with a smart meter and those with a regular meter: a smart electricity meter reads the consumption data continuously and transmits the information automatically to the new electricity suppliers, which makes it possible to manage the electricity supply in a controlled and efficient manner.

Its smart operation makes the transition simple without the need for a technician to arrive. If you have a smart electricity meter, you can already join one of the companies with a phone call, in a simple and short process that is done entirely remotely. If you have a basic electricity meter, you can wait for the free installation of a smart meter until 2028, or pay NIS 273 and install it now. In any case, the financial benefits for smart meter owners will be higher even after the opening of the option to connect with a regular meter in the summer.

Before choosing a new electricity supplier, it is advisable to compare prices and adjust the package to your consumption habits. Among the companies that have entered the electricity market are also gas companies and communication companies, so that in addition to discounts on electricity bills, electricity packages will be offered that combine benefits in gas, cellular and internet services.

Lack of public awareness

Last January, the Amishragaz company conducted a survey (using the sample panel) from which it emerged that 52% of Israelis are not aware that they can change electricity supplier. Among those who heard about the reform, the majority stated that its main points are the introduction of competition into the electricity market and the possibility of lowering the bill. When asked if they would move to another company, 27% said they might, 26% said they would for sure and 47% said they would not.

Among the reasons for refusing to move: don't know other people who have moved, don't have a smart meter, live in a rental, the move is complicated, trust only the electric company or don't understand enough about the issue. According to Gili Sasson, Amishragaz's VP of Marketing, "the results of the survey prove that the public in Israel is far from understanding the meaning of the reform and especially the great potential for financial savings."

Shaul Goldstein, CEO of Nega (electricity system management): "The Minister of Energy's announcement to open the electricity market quickly and independently of replacing the basic meter with a smart one will greatly promote competition in the electricity sector. If all consumers receive a 5% discount, they will be able to save a total of approximately NIS 750 million per year."

CEO of the Electric Company, Meir Spiegler: "Nationwide deployment of smart meters is the basis for opening up the electricity supply sector to competition. We shortened the original timetables according to which the deployment of all smart meters was aimed at 2036, and brought it forward to 2028. In 2023 alone, we doubled the rate of installing smart meters and installed approximately 427,000 meters in the process. We will continue to work to simplify processes, shorten schedules, increase competition and an absolute commitment to the right to serve the public."

Director General of the Ministry of Energy and Infrastructure, Yossi Dayan: "We will continue to promote significant reforms in the coming years as well. These steps will lead to significant savings for consumers, contribute to economic growth and make the energy economy more efficient, economical and greener."

What do the companies offer?

Electra Power (former Super Gas)

Offers several packages: POWER package - fixed discount on electricity consumption at all hours of the day (5% in the first year, 6% in the second year and 7% in the third year).

High-tech package - permanent discount on consumption between 11:00 PM and 5:00 PM the next day (8% in the first year, 9% in the second year, 10% in the third year).

Double package - choose one of the electricity routes and receive an additional discount of NIS 120 per year on gas bills.

Amishragaz electricity

Offers a fixed discount of 6.5% on the electricity tariff, plus an option for a package that combines electricity + gas benefits (one month free of charge each year and a 10% discount on gas tanks, up to two tanks per year).

Cellcom Energy Electricity

Offers three packages: Permanent savings package - permanent discount on electricity consumption at all hours of the day (5% in the first year, 6% in the second year, 7% in the third year).

Package for working from home - a fixed discount of 15% on consumption on Sunday-Sunday between the hours of 7:00-17:00.

Night saver package - 20% on electricity consumption on Sunday-Sunday between 10:00 p.m. and 7:00 a.m. the next day.

Power outage

Also offers several packages:

daily discount package - 15% fixed discount on electricity consumption on Sunday-Sunday between the hours of 8:00-16:00.

Free night package - free for the first three months and then 15% discount on consumption on Sunday-Sunday between midnight and 7 am the next day.

Discounted weekend package - 10% permanent discount on electricity consumption from Thursday at midnight to Wednesday night at midnight. 24/7 package - a fixed discount of 6% on electricity consumption at all hours of the day.