Alon Tavor Power Station Sues Electricity Authority for $7.5 Million
The Alon Tavor power station has filed a lawsuit seeking 29.5 million shekels (approximately $7.5 million) from Noga, the company managing Israel's electricity grid. The suit, lodged with the Haifa District Court, alleges that Noga improperly withheld this sum from state payments due to malfunctions at the station in 2023-2024. Alon Tavor Power, owned by a consortium including Michtam Shmir, Raphak Group, PowerGen, and PMEC, operates on natural gas in the Jezreel Valley and has a capacity of up to 810 megawatts. The current owners purchased it from the Israel Electric Corporation in 2019 for 1.9 billion shekels.
The lawsuit explains that a core component of the station's business model is receiving payments for "availability," meaning compensation for making its generation capacity available to the grid, regardless of actual electricity production. These availability payments are based on the station's daily declaration of capacity, independent of whether the grid operator actually requires production or if the issue stems from the electricity grid itself. Noga is permitted to penalize a power station for failing to meet its declared availability, unless the reason is a malfunction within the station, with a maximum of 54 such malfunctions allowed annually.
The dispute centers on 15 malfunctions at Alon Tavor between 2023 and 2024, which reduced its output. Noga fined the station 29.1 million shekels, offsetting this amount from payments owed. Alon Tavor argues that Noga's reasoning for the fines is flawed, claiming that even partial operation of a unit should not be considered a failure if the core issue is a malfunction. The station contends that Noga's stance penalizes them for attempting partial operation instead of a full shutdown, creating a disincentive to declare partial availability.
Furthermore, Alon Tavor claims Noga withheld an additional 400,000 shekels due to its inability to provide full availability caused by malfunctions in a substation owned by the Israel Electric Corporation. The power station asserts that issues outside its control or responsibility, such as problems at the substation or a high-voltage line, should not affect its availability payments. Alon Tavor alleges that Noga's actions represent a pattern of retrospectively altering contract terms and responsibility boundaries, contradicting the power purchase agreement, industry standards, and professional regulations, resulting in the improper withholding of tens of millions of shekels it was rightfully owed.
