Investor Presentaiton
The 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%
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 December 29, 2020
On December 29, 2020, the EA issued a resolution regarding the
annual 2021 tariff update. According to the EA's decision, the
average household electricity tariff and the market electricity tariff
will fall by approximately 2.3% and 4.9%, respectively, as of 1/1/21,
mainly due to:
•
The sale of Ramat Hovav Power Station
•
Decline in the NG and coal prices
The above was partially offset by:
■The Annual Update
•
Increased renewable energy consumption
•
Entry into force of the excise tax on coal in 2021
Source: IEC's Financial Statements for 2020FY, Electricity Authority's decision No. 59609 on December 27, 2020 - Annual Update 2021 electricity tariff to IEC's consumers
Investor Relations
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