#1Investor Presentation AN חברת החשמל Israel Electric Israel Electric Corp. Business update as of 09/30/2022 December 2022#2Disclaimer חברת החשמל Israel Electric The Company is a public company, with all it entails, and this information provided to you, all or part of it, may constitute "Inside Information" in accordance with Israel's Securities Law, 1968 (hereinafter: "Securities Law"), and making use of this information (including, but not only, by way of carrying out a transaction in a security of IEC, and/or delivering this information, or an opinion regarding a security of IEC, to any third party who may use this information for purposes of such transaction) may constitute a criminal offence pursuant to Securities Law. Please treat this information as CONFIDENTIAL and do not disclose, publish or deliver all or any part of this information, directly or indirectly, to any third party, except for your employees, officers and any person acting for you or on your behalf, strictly on a "need to know" basis, and only after you have notified the person receiving any of this information that the information is confidential and that making use of this information may constitute a criminal offence as specified above This Presentation does not constitute or form part of and should not be construed as an offer to sell or issue, or the solicitation of an offer to buy or acquire, securities of the Company. This Presentation is solely for informational purposes. The information contained in this presentation regarding the Company's operations is concise and presented for convenience purposes only. To get a complete picture of the Company's operations, please refer to the immediate and timely reports of the Company to the Israeli Securities authority and the Tel-Aviv Stock Exchange. This presentation includes forward-looking information, as per its definition in the Securities Law, including forecasts and other information whose realization is uncertain and depends on factors that are not under the control of the Company. These factors are based, among other things, on data that is in the possession of the Company as of this date, internal estimates and expectations of the Company regarding trends in the Company's fields of activity and regarding the implementation of the company's plans. The Company's forecast and expectations included in this presentation may not be realized, in whole or in part, or may be realized in a different manner than expected, inter alia due to factors that some of them are not under the control of the Company, including changes in the market conditions and the Company's business environment, regulatory changes, or the realization of any of the risk factors of the Company. The information contained in this presentation is provided as of the date of this presentation. The Company is not under any obligation to update the information in this presentation or to update the forward-looking statements contained in it. Investor Relations 2#3Agenda 1 Executive Summary 2 3 Operational Overview Israeli Electricity Sector 4 Financial Overview 5 Sustainability Overview 6 Appendices Investor Relations 3 חברת החשמל Israel Electric#44 Executive Summary חברת החשמל Israel Electric#5Israel Electric Corp. at a Glance חברת החשמל ■ Established in 1923, 99 years of operation, the Israel Electric Corporation Limited ("IEC") is a dominant player in the Israeli electricity sector and is an essential service provider of electricity in Israel, and the sole vertically integrated provider in the electricity chain. ■ The state of Israel, which holds 99.85% of the IEC's shares, is committed for the GHG reduction in line with Paris Climate Agreement. ■ IEC serves residential, commercial, agricultural and industrial customers throughout the State of Israel, including East Jerusalem and the Palestinian Authority (PA). IEC's goal is to maintain its position as the leading business in the Israeli electricity sector. The Company aims to be Israel's leading electricity provider, an efficient and advanced electricity producer, and one of the world's leading and most advanced grid infrastructure companies Israel Electric IEC Power Grid s 400 kV lines 161 kV lines Steam (dual purpose) Gas turbine (internal combustion) / Combined-cycle (internal combustion and steam) Investor Relations 5#6Key Strategic Targets 費 Main Israel's Electricity Company חברת החשמל Israel Electric Continuing to guarantee and improve reliability of the electricity supply as well as providing backup services for electricity consumers and producers Cleaner Fuel Mix Targeting natural gas as main fuel source in order to reduce the environmental impact $ $ Financial Robustness Meeting key financial targets and adequate liquidity cushion. Between 2018 and 9M.2022, net debt to EBITDA decreased from 4.8x to 4.1x Investor Relations 6#7Key Financial Highlights - 9M.2022 חברת החשמל Israel Electric Revenues CAPEX NIS 4.0 billion Net Financial Debt (1) EBITDA (2) NIS 17.9 billion $5.4 $1.2 NIS 34.8 billion $10.5 NIS 6.9 billion $2.1 IEC Global Baa1 Stable (Moody's) BBB+ Stable (S&P) Credit Ratings IEC Local Aa1.il Stable (Midroog) ilAAA Stable (Maalot S&P) Source: IEC's Financial Statements for 9M.2022 1. 2. Net financial debt is a non-GAAP measure that is defined as credit from banks and other credit providers, plus total long-term debt (including debentures, long-term liabilities to banks, including hedge transactions, liabilities to the State of Israel), leases liabilities and CPI linkage differentials regulatory deferral account, cash and cash equivalents, short-term investments, long and short term receivables in respect of forward contracts and swap transactions, and long-term deposits to secure swap transactions. IEC defines "EBITDA" as a Normalized EBITDA - profit (loss) before income taxes, financial expenses, depreciation and amortization, including movement in regulatory deferral accounts, while neutralizing special non-current events Financial Figures presented in USD according to an average USD/NIS exchange rate of 3.32 as of 9M.2022 Investor Relations 7#8Key Investment Highlights Government Company 99.85% owned by the State of Israel IEC's credit quality is supported by its critical role in Israel's electricity ecosystem Essential Service Provider IEC is an essential service provider of electricity in Israel and the sole vertically integrated provider in the electricity chain Fully Regulated across all segments Electricity Tariff set by the EA, based on forecasted expenses and return on equity, providing predictable revenue to the company Natural Gas Fuel Independence Natural gas from Tamar, Leviathan and other significant natural gas discoveries in Israel have paved the way towards potential fuel independence Investor Relations 8 חברת החשמל Israel Electric#9Key Investment Highlights - cont. Focusing in the T&D segments IEC will focus its activity in the Transmission and Distribution segments and will reduce its share in the generation segment Preparing the ground for renewables חברת החשמל Israel Electric Stable CAPEX in the T&D segments during the coming years in order to enable renewable energy absorption and to achieve the 2030 Ministry of Energy target on renewables Growing attention to ESG aspects Especially in the environmental aspect (conversion of coal units to natural gas), the social aspect (diversity & inclusion) and the governance aspect (deepening corporate governance) Committed to Deleveraging Board and management are committed to deleveraging and are aiming to gradually decrease the ratio of total debt to total assets to 65% by 2025 Investor Relations 9#10Key Financial Targets until end of reform in 2025 Ratios Real net financial debt ratio to normalized EBITDA Total debt to total assets ratio 2025 4.3 Mid-target of 4.6 in 2023 65% חברת החשמל Israel Electric As of 09/30/2022 4.1 (leverage) International rating 67% At least 'BBB' +BBB 2023 Maximum NIS 34 billion 2025 - Maximum NIS NIS 34.8 billion Real net financial debt Liquidity (safety cushion) 31 billion Subject to meet the financial targets listed above regarding debt ratios Minimum NIS 3 billion Composed of balance of cash and short-term deposits will be no less than NIS 1.5 billion and unused secured credit lines valid for a period exceeding one year up to NIS 1.5 billion. The Company complies with the objective Note: The financial targets approved by the Board of Directors On December 14-16, 2021 until the end of the reform period by the year 2025. Source: IEC's Financial Statements for 9M.2022 Investor Relations 10#11GCA Financial Targets for Government Companies חברת החשמל Israel Electric Ratios Targets As of 09/30/2022 FFO (1) to adjusted financial debt ratio Short term 11% to 18% Long term 15% to 23% 7% FFO (1) plus interest to interest ratio Greater than 3 3.56 Return on capital employed (ROCE) ratio 4.2% in the short term 5.4% 1. FFO is based on calculation of the EBITDA before normalization while neutralizing the change in liabilities with respect to employee benefits (from cash flow report) and other expenses (revenues), net, less interest and taxes paid (from cash flow report). Source: IEC's Financial Statements for 9M.2022 and a letter regarding the financial targets for Government Companies, circulated by the GCA on November 17, 2021 and approved by the IEC's Board of Directors. Investor Relations 11#1212 חברת החשמל Israel Electric Operational Overview#13The IEC Electricity Chain Generation 52 Generation Units in 15 Power Sites Transmission Transformation System Distribution חברת החשמל Israel Electric Supply 2.6 11 Switching stations 29,718 km Medium Voltage Million Households Lines 2.9 148 Substations 39,925 km Million Customers Low Voltage Lines Source: IEC Financial Statements for 2021FY Power Lines 778 km 400 kV lines 4,947 km 161 kV line (includes underground lines) 42 km 115 kV lines 52,847 Distribution Transformers Investor Relations 13#14Historical Performance (1) Comparison of Key Metrics חברת החשמל Israel Electric IEC Historical CAPEX (3) in the T&D segments (Nis billion) % 12/31/2011 12/31/2021 Change $1.0 3.1 Population (2) (mn) 7.8 9.4 20.5% $0.5 82.3% 1.7 1.7 Number of 2.5 3.0 20% Customers (mn) 1.1 1.4 0.6 National Peak 10,455 14,172 35.0% Demand (MW) 2011 2021 Transmission network lines (km of circuit) 5,256 5,767 9.7% Transmission Distribution IEC continues to be the sole vertically integrated electric utility in Israel 1) Source: IEC Financial Statements for 2011FY and for 2021FY, IEC Statistical Report for 2011FY and The Electricity Authority - Report on State of Electricity Sector Year of 2021. According to the Israeli Central Bureau of Statistics 2) 3) CAPEX after re-measurements, reform costs and lease Financial Figures denote USD figures at USD/NIS average exchange rate of 3.58 & 3.23 for 2011FY & 2021FY, respectively Investor Relations 14#15The IEC Transmission Segment Development plans for 2022-2026 in the transmission segment: ■ Addition of appx. 779 circuit km ultra-high voltage transmission lines (400 KV). ■ Establishment of appx. 748 circuit km high voltage transmission lines (161 KV). חברת החשמל Israel Electric ■ Upgrading of appx. 760 circuit km of existing network (high voltage poles) and re-construction of appx. 389 circuit km. ■ Addition of appx. 137 km underground cable circuits. ■ Addition of 5 new switching substations so that by year 2026, 16 switching substations 400/161 KV with a transmission capacity of 22,275 MVA will be available for the company needs. ■ At the end of 2022, there are expected to be around 150 substations with a total transmission capacity of 19,972 MVA and 12 switching stations. ■ Addition of appx. 38 fixed substations with transformer capacity of 4,480 MVA, so that by year 2026, appx. 186 substations with a transmission capacity of 25,616 MVA (fixed, temporarily and mobile) will be available for the company needs. Source: IEC's Financial reports for 2021FY Investor Relations 15#16The IEC Generation Segment & Fuel Mix חברת החשמל Israel Electric Fuel Mix by Electricity Generated January 1-September 30, 2022 ■ Construction of two combined cycle gas turbines (units 70-80) at the 'Orot Rabin' site. ■ Deactivation and Preservation of coal-fired Units 1-4 at 'Orot-Rabin' site in order to guarantee the reliability of electricity supply to consumers. ■ Conversion of the remaining 6 coal units to natural gas gradually until 2026 (units 5-6 at 'Orot Rabin' and units 1-4 at 'Rothenberg'). Total generation in the electricity sector is expected to be coal free, based on natural gas and renewable energies no later than year 2026. Natural gas & LNG 57.6% Coal 42.0% Diesel oil & Fuel oil 0.4% IEC Generation Facilities (1) No. of units Installed Capacity (MW) Steam (dual purpose) (coal and fuel oil) (2,3) 10 4,840 Steam (dual-purpose) (natural gas and fuel / diesel oil) 6 1,340 Gas turbine (internal combustion) (industrial gas) 9 914 Gas turbine (internal combustion) (jet engine) Combined cycle (internal combustion and steam) 16 504 9 3,357 Total 50 10,955 Source: IEC's Financial Statements for 2021FY and for 9M.2022 1) As of September 30, 2022 2) January 1 - September 30, 2021 Natural gas & LNG 55.4% Coal 44.4% Diesel oil & Fuel oil 0.2% 3) Units 1-4 at the Orot Rabin Power Station will be transferred to preservation subject to the following conditions: three natural gas reservoirs in separate infrastructure + start of the first CCGT activation. Please see the decision of the Minister of Energy relative to the preservation of units 1-4 of February 8, 2021 published on the EA website In accordance with the Minister of Energy's policy principles, which was published on the Ministry of Energy's website on November 24,2019, it was decided that units 5-6 at Orot Rabin Power Station and units 1-4 at Rutenberg Power Station will gradually converse using natural gas in order to stop routine coal use until 2025 and no later than 2026. Investor Relations 16#17Natural Gas Overview Firm gas supply from Tamar Field A long term Gas Sale and Purchase Agreement (GSPA) was signed on March 2012. On January 24, 2022, an amendment to the agreement was signed with all Tamar partners, following the contractual first price reopening date. חברת החשמל Israel Electric ■ Reduction of the contractual gas price applicable for the Take or Pay (TOP) quantity in a rate that is a few percent higher than the maximum rate of first price re-opener in the GSPA Agreement. According to the GSPA, the gas price for the minimum charged amount is linked to the US CPI. Few restrictions for the US CPI indexation have been set in the amendment. ■ The parties' entitlement was maintained for another re-opener date for the minimum amount (in the range of up to 10% supplement or reduction) on December 31, 2024 (instead of the re-opener date set in the GSPA agreement - July 1, 2024). ■ The agreement term was extended for another 2.5 years until December 31, 2030. ■ Commitment to purchase additional 16 BCM according to the Company's actual operational needs. ■ The company will undertake to order a minimum daily quantity on an operational basis during the agreement period. ■ Price of gas for the operational quantity and for any additional quantity up to the maximal daily quantity but in excess of the minimal annual quantity (Take or Pay), will be slightly lower than $ 4 per MMBTU without indexation. ■ The amendment to the Tamar agreement entered into force on July 22, 2022 after the fulfillment of all the precedent conditions. The accounting between the parties will be executed retroactively as from July 1, 2021. Source: IEC's Financial Statements for 2021FY and for 9M.2022 Investor Relations 17#18Natural Gas Overview - cont. Gas supply from Leviathan Field ◉ חברת החשמל Israel Electric On July 4, 2021 an agreement for Spot sale and purchase of natural gas was signed between IEC and the Leviathan partners. The contract period is one year. On June 23, 2022 the contract period was extended for another year. The price of gas will be determined each month. The contract does not include any obligation regarding the purchased quantities (TOP or minimum quantity). Gas supply from Karish Field On March 14, 2022, IEC entered into an agreement with Energean Israel Limited for Spot sale and purchase of natural gas for one year, starting from the date of delivery of gas from the reservoir. On October 29, 2022, the delivery of gas from the reservoir started and the agreement came into force. The price of gas will be determined each month. The contract does not include any obligations regarding the purchased quantities. Sufficient gas supply and predictable prices - stable operational environment Source: IEC's Financial Statements for 2021FY and for 9M.2022 Investor Relations 18#19The Sector Reform Main points of the reform חברת החשמל Israel Electric Organizational change, efficiency plan and administrative flexibility Essential service provider in the transmission and distribution segments Opening the supply segment market to competition from other entities Transfer of the system Management and additional units to a separate Government company Sale of generation sites and increased competition in the generation segment Value added services, 00 installation of smart meters, construction and operation of storage facilities Strengthening the financial stability of IEC Compliance with financial targets Assets arrangement Source: IEC's Financial Statements for 2021FY and for 9M.2022 Investor Relations 19 Construction & operation of two combined cycle gas turbines at the 'Orot Rabin' site#20The Sector Reform Timeline Gov' Decision on Reform Done Sale of Alon Tavor site Done Done Sale of 'Ramat Hovav' site Sale of 'East Hagit' site In process Sale of "Eshkol" site In discussions Layout for continued operation of Reading site (in accordance with the Arrangements Law) Done Submitting a plan in Reading site for two new CCGT, before depositing Done Separation of the System Management & PDT In process Construction of the first NG fired CCGT H (unit 70) at 'Orot Rabin' site In process Prepared for vacant possession In process T=0 06/03/18 Construction of the second NG fired CCGT H (unit 80) at 'Orot Rabin' site Transfer of 'Area D' Preparations for a pilot in the supply segment Pilot in the supply segment חברת החשמל Israel Electric Due for a delay By year 2032 Ştable activation (1) Stable activation (1) Possession transferring subject to milestones standing in an agreement Preparations for opening the electricity sector to full competition (2) T=18 12/03/19 T=22 03/31/20 T=30 T=36 T=39 T=41 12/03/2006/03/21 09/01/21 01/11/21 T=48 06/01/22 T=55 T=59 T=60 T=61 T=63 01/01/23 04/30/23 06/03/23 06/30/23 09/03/23 11/2022 T=68 01/31/24 1. After the date of the Financial Statements, unexpected events have occurred which could delay the stable operating date of the new CCGT units 70 and 80 at the Orot Rabin site 2. The Electricity Authority (EA) is intended to open the electricity sector to full competition during 2024 Source: IEC's Financial Statements for 2021FY and for 9M.2022 Investor Relations 20#21The Israeli Electricity Sector Structure System Administrator Supply Distribution Transmission Generation Capacity 2020 0% 50% 100% System Administrator Supply Distribution Transmission Generation Capacity 2025* חברת החשמל Israel Electric 0% 20% 40% 60% 80% 100% IPP IEC IPP Historical Distributers IEC Historical Distributers I Noga (Former name SMC) In light of reform in the electricity sector, The Noga company was established in order to manage the electricity system in Israel. The share of IEC in the generation segment will be reduced and the supply segment shall be open to competition. IEC will focus its activity in the T & D segments. The transmission activity and most of the distribution activity shall remain in IEC as Essential Service Provider *The Electricity Authority Forecast Source: The Electricity Authority - Reports on State of Electricity Sector for the years 2019-2021. Investor Relations 21#22IEC's Human Capital Streamlining of IEC's Workforce Number of employees 12,754 12,371 A decrease of 1,917 employees (appx. 15%) of IEC's workforce 11,908 11,902 חברת החשמל Israel Electric 11,476 11,483 11,391 11,103 (1) 10,837 2014 2015 2016 2017 2018 2019 2020 2021 9/2022 As part of the reform in the electricity sector, an efficiency program is resuming for the years 2022-2025 1. From 2018 to September 30, 2022, 1,554 permanent employees retired as part of the reform agreements in parallel with the employment of temporary employees. Source: IEC's Financial Statements for 2014FY-2021FY and for 9M.2022 Investor Relations 22#2323 חברת החשמל Israel Electric Israeli Electricity Sector#24The Electricity Tariff Tariff Structure חברת החשמל Israel Electric In accordance with the Electricity Sector Law, the electricity tariff is set by the Electricity Authority (EA) and reformulated from time to time. The outline of the formula is as follows: Recognized costs per segment (e.g. fuel costs, operational costs, depreciation costs and financial costs). Some of the recognized costs are also attributed to funding the reform costs Fair rate of return on equity per segment Electricity Tariff Ongoing Update Actual costs are examined every 2 weeks by the EA (at the time of CPI and fuel prices changes) Discrepancies between forecasted costs and actual cost are reconciled on the earlier of: ■ A difference of 3.5%, provided that 3 months have passed since the last update ■ A difference of 5.5% ■The Annual Update Annual Update Once a year, The current year's costs are updated based on forecasts as well as on previous years' reckoning - the gap between the previous year's forecast components and the actual costs of the previous year Tariff update as of August 1st, 2022 On February 1st, 2022, the household electricity tariff increased by approximately 5.7%, following the EA decision, mainly due to the increase in the global coal prices. The above was partially offset by: ⚫ Decrease in the USD/NIS exchange rate and in the global NG prices • The sale of Ramat Hovav Power Station (half of which was recognized in 2021 Tariff) and the publication of the results of the tender for the sale of East Hagit Power Station On May 1st, 2022, an amendment was made to the annual update of the electricity tariff for 2022, in which the average household tariff decreased by 2.4% due to the reduction of the excise tax on coal. On August 1st, 2022 the household electricity tariff increased by 8.6% mainly due to an ongoing and sharp increase in the global coal prices and other metrics, which at the beginning of July 2022, reached an increase of appx. 20% in relation to the previous recognized cost. Source: IEC's Financial Statements for 2020FY, Electricity Authority's decisions no. 62302 as of 01/24/22, no. 63006 as of 04/12/22 and no. 07/27/22 - electricity tariff to IEC's consumers Investor Relations 24 24#2525 Financial Overview חברת החשמל Israel Electric#26Financial Highlights Revenues EBITDA (1) חברת החשמל Israel Electric (NIS bn) (NIS bn) $6.5 $6.6 $7.0 $5.3 $6.9 23.4 23.6 24.7 23.8 $5.4 22.2 $5.3 $2.3 $2.2 $2.2 $1.7 $2.3 $2.1 17.3 17.9 8.1 8.0 7.9 $1.8 7.5 7.5 6.9 5.9 2017 2018 2019 2020 2021 9M.2021 9M.2022 2017 2018 2019 2020 2021 9M.2021 9M.2022 Historical Investments by segments (CAPEX) (2) Net Financial Debt (4)/EBITDA (NIS bn) $1.7 $1.9 $1.5 5.9 6.0 $1.3 $1.1 $1.0 5.1 0.5 $1.2 4.8x 1.8 4.2 3.9 3.7 1.7 4.0 4.4x 4.3x 4.2x 1.5 4.0x 4.1x 0.3 0.2 1.1 1.3 1.1 1.5 1.4 1.2 1.3 0.7 1.0 1.1 0.9 4.8x 4.4x 2.9 4.0x 4.3x 4.2x 4.1x 2.2 2.4 1.8 1.8 1.3 1.4 T (3) 2017 2018 2019 2020 2021 9M.2021 9M.2022 (5) 2018 2019 2020 2021 9M.2021 9M.2022 Assets and Liablities which which wasn't directly callsified ■Supply ■System Manager ■Generation Others Distribution Transmission Source: IEC's Financial Statements for 2017FY-2021FY and for 9M.2021, 9M.2022 1. 2. 3. 4. 5. IEC defines "EBITDA" as a Normalized EBITDA - profit (loss) before income taxes, financial expenses, depreciation and amortization, including movement in regulatory deferral accounts, while neutralizing special non-current events. CAPEX before re-measurements and reform costs. CAPEX also include non-cash adjustments in 2019 in accordance with IFRS 16 (Leases) in the sum of appx, Nis 1.4 billon. IEC defines "net financial debt" as credit from banks and other credit providers, total long-term debt (including debentures, long-term liabilities to banks, including hedge transactions, lease liabilities, debentures to the State of Israel and liabilities to the state of Israel), less cash and cash equivalents, short-term investments and other receivables (including receivables for forward contracts and swap transactions, MTM and long-term deposits and regulatory deferral account assets with respect to linkage differentials). In annualized terms, calculation based on LTM EBITDA. Financial Figures denote USD figures at USD/NIS average exchange rate of 3.60, 3.59, 3.56, 3.44, 3.48, 3.23, 3.25 & 3.32 for 2017FY, 2018FY, 2019FY, 2020FY, 2021FY, 9M.2021 & 9M.2022 respectively Investor Relations 26#27Historical Cash Flow (NIS bn) חברת החשמל Israel Electric $1.8 $1.9 $1.6 6.5 6.5 6.5 $1.5 5.8 5.6 5.6 4.8 $1.2 5.0 3.8 $0.4 $0.5 0.6 $0.2 1.4 0.7 (1.3) (1.2) ($0.4) ($0.4) (2.7) (3.1) (3.3) ($0.9) ($0.9) (4.8) (5.2) (4.0) ($0.8) ($1.2) (2.5) ($0.8) ($1.3) (6.3) ($1.6) ($1.8) 2018 Operating activities 2019 2020 Investment activities, net (1) 2021 9M.2021 9M-2022 (2) Financing activities - Total Liquidity Generating sufficient cash flow from operations enables IEC to decrease debt, preserving a sound liquidity position Source: IEC's Financial Statements for 2018FY-2021FY and for 9M.2021, 9M.2022. 1. Investment activities excluding repayment (or deposits) of bank deposits. 2. IEC defines "liquidity" as cash and cash equivalents, short term investments and available credit facilities. Financial Figures denote USD figures at USD/NIS average exchange rate of 3.59, 3.56, 3.44,3.23, 3.25 & 3.32 for 2018FY, 2019FY, 2020FY, 2021FY, 9M.2021 & 9M.2022 respectively Investor Relations 27#28Net Financial Debt (1) Over Time Prepared According to Government Companies Regulations IFRS חברת החשמל Israel Electric $13.4 (NIS bn) $13.8 51.7 $13.1 49.9 $11.5 46.9 $11.3 $11.7 44.6 43.2 42.1 $10.7 38.3 $10.5 $10.1 $10.0 36.1 $8.7 34.8 32.4 30.0 2012 2013 2014 2015 2016 2017 2018 2019 (2) 2020 2021 9M.2022 Source: IEC's Financial Statements for 2012FY-2021FY and for 9M.2022 1) Net financial debt is a non-GAAP measure that is defined as credit from banks and other credit providers, plus total long-term debt (including debentures, long-term liabilities to banks, including hedge transactions, liabilities to the State of Israel), leases liabilities and CPI linkage differentials regulatory deferral account, less; cash and cash equivalents, short-term investments, long and short term receivables in respect of forward contracts and swap transactions, and long- term deposits to secure swap transactions. 2) As from 01/01/2019, "net financial debt" also includes lease liabilities. Figures denote USD figures at USD/NIS average exchange rate of 3.86, 3.61, 3.58, 3.89, 3.84, 3.60, 3.59, 3.56, 3.44,3.23 & 3.32 for 2012FY, 2013FY, 2014FY, 2015FY, 2016FY, 2017FY, 2018FY, 2019FY, 2020FY, 2021FY & 9M.2022 respectively. Investor Relations 28#29Consolidated Debt Breakdown as of September 30, 2022 Annual Debt Maturities (Principal in NIS billions)(1) חברת החשמל Israel Electric Profile of International IEC $ Bonds (2) Outstanding Loans from local and foreign banks 6.4 Local bonds, private bonds and non-bank loans Maturity Coupon 21.2 Amount ($mn) Jun-23 650 6.875% Nov-24 1,250 5.000% 3.9 3.4 Dec-26 125 7.875% 21.2 6.2 1.6 1.8 Dec-27 300 7.750% 3.7 Aug-28 1,000 4.250% 1.6 02 10.2022-9.2023 10.2023-9.2024 0.2 10.2024-9.2025 Ու Mar-30 40 8.940% 10.2025-9.2026 10.2026 and Feb-32 500 3.750% thereafter Dec-96 125 8.100% Interest Rate Exposure(3) Type of Instrument(¹) Debt by Currency (1) Debt by Linkage (1) Floating 5.9% Foreign bank loans 1.8% Local public bonds 42.3% USD Other NIS non- linked 9.3% 39.7% 3.7% Local bank loans 4.1% Euro Foreign currency 0.8% NIS CPI linked 44.2% Fixed 94.1% NIS 46.5% Private bonds and non-bank loans 55.8% 51.9% Source: 1) IEC immediate report on the Corporate Liabilities Status, IEC Financial data. 2) IEC Financial data and Bloomberg as of November 2022 3) IEC's Financial Statements for 2021FY and for 9M.2022 Investor Relations 29 29#30חברת החשמל Israel Electric Sustainability Overview 30 50#31Environment, sustainability and corporate governance (ESG) 1 חברת החשמל Israel Electric חברת החשמל Israel Electric Ethical Aspects of Business Conduct Employee health, Wellbeing and working relations Responsible Supply Chain Environment Corporate Governance Diversity & Inclusion Employee Volunteering IEC earned the highest ranking in the Maala(1) 2022 Index: Platinum* (for the ninth consecutive year) Source: IEC's Corporate Sustainability Report for 2020, Maala's rating for IEC for 2022 1. Maala is the non-profit CSR standards-setting organization in Israel who serves the needs of some 120 members, comprised of Israel's large and mid-size companies, committed to excellence in corporate citizenship. The criteria in the rankings are determined by an independent public committee composed of content experts, academics, heads of social environmental organizations and representatives of the business sector. Investor Relations 31#32State of Israel's Commitments on Climate 100 Action Items Just before COP26, the government released a "100 Action Items" plan to develop technologies aimed at reducing CO2 emissions and preparation for climate change with the cooperation of 14 ministries O המשרד להגנת הסביבה Absolute Targets חברת החשמל Israel Electric • State of Israel's goal is to reduce absolute greenhouse gas emissions: By 27% by 2030, from 2015 levels • By 85% by 2050, from 2015 levels Renewable Power Targets • The Minister of Energy announced to phase-out coal-fired power generation no later than 2026 and determined targets for a renewable power generation share of 20% in 2025 and 30% in 2030. IEC will continue to develop the electricity network system in order to enable renewable energy absorption and to achieve the 2030 target • Israel signed the COP26 pledge to phase-out from coal by 2030 for major economies (2040 for the rest) and end investments in new coal power generation plants الوزارة لحماية البيئة Israel Ministry of Environmental Protection Sectoral Targets for Electricity The electricity/heat sector make up approx. 45% of Israel's total emissions (latest data 2019) • State of Israel has a sectoral target to reduce greenhouse gas emissions from electricity generation (IEC & IPP's): By 30% by 2030, from 2015 levels (37.4 MtCO2eq) By 85% at least by 2050, from 2015 levels (37.4 MtCO2eq) Source: Report of greenhouse gas emissions in Israel - Annual Tracking regarding the implementation of the National Program and Goals to reduce greenhouse gas emissions and the commitment of Israel to the climate trust, The Ministry of Environmental protection May 2021; government decision number 171 dated July 25, 2021 "Transition to low carbon economy"; Emissions report of air pollutants from fuel burning, according to fuel consumer, The Israeli Central Bureau of Statistics Investor Relations 32 32#33IEC has taken significant steps to reduce emissions Nitrogen Oxides NOX Sulfur Dioxide SO2 Gram/KWh produced Gram / KWh produced 2.0 1.5 1.32 -51% 10 1.0 0.5 0.0 00 2015 Carbon Dioxide CO2 0.65 2021 1,000 800 667 -7% 622 600 400 200 0 2015 2021 Source: IEC Environmental report for the year 2021 Investor Relations 33 Gram / KWh produced Gram / KWh produced 2.0 -69% 1.5 1.34 1.0 0.5 T 0.0 2015 Particulate Matter PM 0.06 -37% 0.046 0.03 0.42 2021 0.029 0.00 2015 2021 חברת החשמל Israel Electric#34Coal Usage Over Time חברת החשמל Israel Electric 14.0 Million Ton % of coal out of Total Electricity Market Fuel Mix 61% 11.8 10.9 52% 10.7 49% 44% 9.1 8.2 8.3 7.8 37% 7.2 32% 6.4 30% 30% % Implementing Government policies ■The State of Israel signed the Paris Agreement in 2016 and has significantly limited the usage of coal for electricity generation ■ An emissions reduction project in the larger coal units was executed at a significant cost of NIS 7.1 billion (1) ■ Government target of Israel is to be "coal free" by 2030. The Israeli Electricity Market will stop routine coal use until 2025 and no later than 2026 following the Israeli Minister of Energy's policy principles on 11/24/2019 ■IEC is financially protected from change in fuel mix by the electricity tariff 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: IEC's Financial Statements for 2012FY-2021 FY, The Electricity Authority Report on State of Electricity Sector Year of 2021 1) The emissions reduction cost does not include interest during the construction period Investor Relations 34 34 The Future of Coal ■ The current coal capacity is 4,840 MW of which: 1,440 MW will be mothballed in 2023/24 following the Israeli Minister of Energy decision on 2/8/2021 • 3,400 MW are expected to be converted to NG by the end of 2025 following the Israeli Minister of Energy's policy principles on 11/24/2019#35The Israeli Electricity Sector Fuel Mix Electricity Market Fuel Mix (IEC & IPP) (TWH) חברת החשמל Israel Electric 84.3 72.5 72.8 74.0 16.7 69.6 67.4 68.3 3.3 4.2 5.7 65.4 63.5 61.5 61.5 1.8 1.8 2.0 59.8 1.3 58.4 0.2 1.5 0.9 0.9 2.6 9.3 48.8 22.8 21.0 27.1 10.8 30.4 34.4 41.1 43.2 46.3 46.1 51.0 64.9 38.7 34.2 35.1 32.1 30.1 29.2 24.2 22.0 20.6 21.9 19.0 16.9 2.8 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 *2025 Coal Natrual Gas ■Diesel Fuel Other Renewable Energy The Israeli Electricity Sector is expected to be "coal free" by 2030 (the target may be preceded to 2025)(1) Source: The Electricity Authority - Report on State of Electricity Sector Year of 2021. * The Electricity Authority Forecast 1. For that matter please see the Minister of Energy's statements and the Ministry of Energy's policy for 2030 regarding the rehabilitation from polluting fuels Investor Relations 35#36Thank you! For questions or additional information, please contact IEC Investor Relations: [email protected] Investor Relations 36 חברת החשמל Israel Electric#37Appendices 37 32 חברת החשמל Israel Electric#38Income Statement (NIS millions) (NIS millions) Revenues 12/31/2021 22,150 For the period: 09/30/2021 חברת החשמל Israel Electric 09/30/2022 17,268 17,906 Cost of operating the electricity system Fuels 5,875 4,212 7,158 Purchases of electricity 6,872 5,488 4,681 Operation of the generation system 4,086 3,109 3,082 Operation of the transmission and distribution system and others 2,740 2,064 2,130 Total costs 19,573 14,873 17,051 Profit from operating the electricity system 2,577 2,395 855 Other expenses (revenues), net Sales and marketing expenses Administrative and general expenses Income from liabilities to pensioners Reform agreement and other agreements results Profit from current operations Financial expenses, net Loss before income taxes Income from taxes on income Loss after income taxes Company's share of the profit (loss) of asociated companies Loss before regulatory deferral accounts 15 2 (1,390) 853 632 603 782 547 630 (47) (46) (112) 348 235 168 626 1,025 956 1,912 (1,286) (266) (1,020) 1,472 1,165 (447) (209) (92) (41) (355) (168) (9) (9) 2 (1,029) (364) (166) Movement in regulatory deferral accounts balances, net of tax Profit for the period 2,314 1,465 2,547 1,285 1,101 2,381 Profit (loss) with respect to cash flow hedging, net of tax (74) 39 23 Remeasurement of a defined benefit plan, net of tax 776 1,194 1,602 Movement in balances of regulatory deferral accounts balances, net 110 83 (208) Other Comprehensive profit for the period, net of tax 812 1,316 1,417 Comprehensive income for the period Source: IEC's Financial Statements for 9M.2022 Investor Relations 38 2,097 2,417 3,798#39Balance Sheet (NIS millions) חברת החשמל Israel Electric Assets Current assets 12/31/2021 09/30/2021 09/30/2022 Liabilities and Equity 12/31/2021 09/30/2021 09/30/2022 Current liabilities Cash and cash equivalents 2,454 1,218 2,110 Credit from banks and other credit providers 5,425 4,037 5,467 Short term investments 332 348 448 Trade payables 2,786 3,179 4,490 Trade receivables for sales of electricity 4,290 5,824 5,757 Other current liabilities 1,238 1,668 1,552 Other current assets 665 795 1,074 Inventory - fuel 1,489 933 2,999 Customer advances, net of work in progress Provisions 740 700 829 686 726 671 Inventory stores 128 144 139 Liabillities of disposal groups classified as held for sale 147 Assets of disposal groups classified as 160 236 Total current liabilities 10,875 10,457 13,009 held for sale Total current assets 9,518 9,498 12,527 Non-current liabilities Debentures 24,488 25,686 28,982 Non-current assets Liabilities to banks 5,155 3,101 3,604 Inventory - fuel Liabilities with respect to other benefits after 1,624 1,618 1,546 6,874 6,759 5,449 employment termination Long-term receivables 2,294 2,463 2,208 Deferred taxes, net 7,198 7,265 8,390 Investment in associates 4 4 15 Liability to the State of Israel 1,793 1,787 1,859 Assets with respect to benefits after 8,280 8,842 10,672 Lease liabilities 542 570 451 employment termination Fixed assets, net 59,123 58,546 59,339 Other liabilities 592 577 519 Intangible assets, net 1,188 1,207 1,163 Total non current liabilities 46,642 45,745 49,254 Total non-current assets 72,513 72,680 74,943 Equity 28,825 29,145 32,623 Debit balance of regulatory deferral accounts 8,581 7,869 11,159 Credit balances of regulatory deferral accounts and deferred taxes with respect to regulatory deferral accounts 4,270 4,700 3,743 Total assets and debit balance of regulatory deferral accounts 90,612 90,047 98,629 Total liabilities, equity and credit balance of regulatory deferral accounts 90,612 90,047 98,629 Source: IEC's Financial Statements for 9M.2022 Investor Relations 39#40Israel Generation Capacity and Demand חברת החשמל Israel Electric Renewable Energy + Pumped-storage hydroelectricity IPPS Gas Fired IPPS (1) IIEC's Installed Generating Capacity National Peak Demand (MW) 27,852 21,502 10,270 19,711 18,923 17,762 17,972 3,956 2,335 2,023 946 1,303 3,334 4,148 3,199 14,620 14,172 12,746 12,921 13,568 5,761 5,704 8,673 13,617 13,335 12,752 11,615 11,615 8,682 2017 2018 2019 2020 2021 *2025 Source: IEC's Financial Statements (2017FY-2020FY), The Electricity Authority - Report on State of Electricity Sector Year of 2021. * The Electricity Authority Forecast. The expected IEC's Installed Generating Capacity contains coal units which supposed to undergo a conversion to gas in a total power of 2.8 GW. 1. Installed Generation Capacity of Independent Power Producers ("IPPS") Investor Relations 40 40#41Demand for Electricity (MW) חברת החשמל Israel Electric National Electricity Peak Demand & Total Electricity Produced in the Entire Sector Trends 14,000 12,000 2.8% Average Annual Growth Rate 10,000 7.6% Average Annual Growth Rate 8,000 6,000 4,000 2,000 (TWh) 75 The demand for electricity in 70 Israel is growing at a fast and steady pace 65 Demand is driven by both 60 population growth and the 73 73 74 increase in electricity 67 68 70 55 consumption per household 64 65 58 60 62 61 50 Noga's demand forecast, -Multiplied by 3.7 in 31 years 54 including Covid-19 effects 45 and the expected demand from electric vehicles, 40 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Total Electricity Produced in the Sector National Electricity Peak Demand Seasonality in Electricity Demand - Average Consumption of Households anticipates an average annual increase of 3.1% in the years 2022 to 2027 (kWh) 1,000 800 600 400 200 0 Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 ■Base Q4- Q1- Q2- Q3- Q4- 2020 2021 2021 2021 2021 Heating Cooling Source: IEC's Annual Financial Statements (1990FY-2021FY), IEC's Statistical data, The Electricity Authority - Report on State of Electricity Sector Year of 2021 Investor Relations 41#42The Reform in the Generation Segment (Selected generation sites) חברת החשמל Israel Electric Eilat 92 Haifa 828 Orot Rabin 2,605 Alon Tavor 583 Reading 428 Caesarea 130 Hagit 1,394 Eshkol 1,693 Gezer 1,336 Rothenberg 2,290 Tzafit 583 Hagit: will be sold units with a capacity of 660 megawatts Ramat Hovav 1,137 Source: IEC 's Financial Statements for 2021FY and for 9M.2022 Investor Relations 42 The numerical figures are in MW - Steam dual purpose: coal and fuel oil Steam dual purpose: natural gas and fuel/ diesel oil - Gas turbine (internal combustion) Combined cycle (internal combustion and steam) A power station planned to be sold during the reform A power station which was sold during the reform#43IEC'S COVID-19 Implications Investments חברת החשמל Israel Electric Supply Chain Security The fuel supply to IEC was not affected by the COVID-19 restrictions There were no significant delays in the investments in the transmission and distribution segments, nor to the investment in the combined cycle at Orot Rabin site CXVID-19 Continuity of service & operations IEC was prepared in advance, in accordance with the requirements of the Israeli law, for business continuity during the crisis period and entered this challenging period with pre-defined work processes, in order to protect employees as well as ensuring energy supply and maintenance activities Cash Management & Finance Maintaining sufficient liquidity above the BoD's goals ("safety cushion") including a Long- term fundraising in May 2020 In cooperation with the State authorities, several steps have been taken to provide reliefs for the electricity consumers such as the possibility of delaying the payment of electricity bills and support was provided to some vendors Executive Branch of the State Source IEC 's Financial Statements for 2021FY and for 9M.2022 Investor Relations 43#44Sources of Natural Gas in Israeli Waters Investor Relations Block 12 (Aphrodite) Introduction of LNG by a regasification ship Karish Tanin Leviathan Plagik As of this date, Tamar, Leviathan & Karish reservoirs are the only active sites Tamar Ruth Dolphin Dalit Haifa Neta & Roie Daniel Hadera lagit Alon Lo Shimshon Tel Aviv Avia Kerea Gezer Noa Mari Ashdod Zafit Jerualem Ashqelon Mary B El Arish Egypt 0 10 20 30 40 50 44 Ramat Hovay Rotem Sdom חברת החשמל Israel Electric#45Tariff Comparison to European Countries (€ cents equivalent) 31.2 27.4 26.9 26.7 Average Price per KWh (1) חברת החשמל Israel Electric 25.8 23.7 23.1 21.9 20.1 19.0 18.4 17.8 17.8 16.9 16.9 16.7 15.9 15.8 15.5 13.9 13.4 12.4 12.1 10.6 10.2 9.1 9.1 Sweden Germany Norway Netherlands Czechia Denmark Spain Italy Ireland Belgium Greece Latvia 7.5 7.5 Turkey Hungary Bulgaria Poland Slovenia Croatia Lithuania Slovakia Finland Israel (October 2022) France Austria Estonia Luxembourg Portugal Cyprus Romania 10/27/2022. Source: Eurostat, Electricity prices for domestic consumers - bi-annual data, as of 10/27/2022. Israel rate is based on the last tariff update that does not include VAT (08/01/2022) and converted EUR/NIS exchange rate of 3.54 as of 1) Average national price in Euro per kWh without taxes for medium size household consumers (annual consumption between 2,500 and 5,000 kWh). Investor Relations