Calculations by the Public Utilities Authority (Electricity) ahead of the updating of the tariff for 2010-2011 have found that the price of electricity will rise by about 20%, if disruptions of the Egyptian gas flow continue.

The rise also assumes that Minister of Environmental Protection Gilad Erdan refuses to cancel an order prohibiting the Israel Electric Corporation (IEC) (TASE: ELEC.B22) from using heavy industrial fuel to produce electricity. As a result of the prohibition, IEC must use diesel that is less polluting but almost twice the price of heavy industrial fuel.

Calculations by the Public Utilities Authority (Electricity) found that if the prohibition is not cancelled, then the IEC will be able to use diesel to replace the shortfall in Egyptian gas, but the price of electricity will rise by 13% at the end of the year, and there will be further rises after that. If the full flow of gas from Egypt is restored then the price of electricity will only rise by 4% at the end of 2011.

The supply of gas from Egypt was stopped for two extended periods of six weeks during the first half of 2011 following terrorist attacks on the Sinai pipeline. Although gas supply was restored earlier this month only 20-30% of the quantity supplied before the attacks is flowing.

Published by Globes, Israel business news - www.globes-online.com - on June 30, 2011

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