Earlier this month, the Electricity Authority had announced a price hike 9.6%. On Wednesday, the Israel Electric Corporation (IEC) agreed to reduce this to an 8.6% hike in the month of August.
This increase is part of a deal that would permit the company to generate power with the use of natural gas.
Price hike from August
According to the IEC, the 8.6% increase in electricity would come into effect from the next month. In return, the Environment Protection Ministry would permit the Eshkol power station to use natural gas.
A statement from the company revealed that the agreement also included a commitment from IEC to reduce coal usage at some of its other plants as well.
There are major natural gas reserves that can be found in Israel, but the Environmental Protection Ministry is aimed at phasing out the use of fossil fuels and opt for renewable energy resources, such as solar.
While gas-fired power plants tend to be cleaner than coal, they are usually located in highly-populated regions and do cause pollution.
Global energy crisis
There has been a surge in energy prices all over the world, which is partly because of the ongoing war between Russia and Ukraine.
Russia is the top energy exporter in the world and the sanctions imposed against it has resulted in problems.
The national regulator in Israel, the Electricity Authority had announced earlier this month that a price hike in electricity was necessary.
This is because about 23% of the power output in Israel still depends on coal usage. The authority said that the global energy crisis that started in 2021 and worsened because of the war was to be blamed for the hike.
Power plants require the use of hydrocarbons and their cost has seen a significant surge, even though Israel is also extracting natural gas for export purposes.
Electricity prices had also been increased in February by 5.7%.
The Manufacturers Association
The news of the reduction in the price hike to 8.6% was welcomed by the Manufacturers Association, which said that they were happy their campaign had worked.
However, the association said that even though it was the right move, a further reduction was necessary because it would hurt small and medium-sized businesses, along with those facing financial insecurity.
Their suggestion was that the price hike be fixed at 5% for businesses and 4.6% for households. The inflation in Israel has remained modest, as compared to the rest of the developed countries.
Nonetheless, Israel has still seen cost of living rise, as prices of building materials to food have gone up. The country is also trying to control the skyrocketing prices of real estate.
The previous month saw fuel prices increase by NIS 8 per liter. There was also a 4.9% increase in the cost of dairy products two weeks ago and Friday saw the price of eggs increase by 6.5%.
Bread prices had also been headed for an increase, but it was negotiated and the rise was finalized to be by 5%.