Israel's Electricity Market Reform Offers Savings, But Consumers Must Choose Wisely

Hundreds of thousands of Israeli households are switching from the traditional electricity provider, "Hevrat Hashmal," to private energy suppliers, attracted by discounts of up to 20-21%. However, the highest advertised discount does not always translate to the greatest actual savings. In August alone, over 20,000 new customers joined private suppliers.

The reform allows consumers to choose which company they purchase electricity from, while "Hevrat Hashmal" continues to manage the infrastructure. While some plans offer a straightforward 5-7% discount on all electricity consumption, others provide higher discounts of 15-21% but only during specific hours, often at night when usage is typically lower. This means a 20% discount might result in less overall savings than a consistent 7% discount.

Furthermore, discounts often apply only to the energy consumed, not fixed charges or transmission and distribution costs. Experts advise comparing offers based on potential savings in shekels rather than advertised percentages. For a family spending 8,000 shekels annually on electricity, a 7% discount on consumption could theoretically save up to 560 shekels, but the total bill reduction will be less due to unchanged fixed costs.

Tariffs with high off-peak discounts can be particularly beneficial for electric vehicle owners charging overnight or households that can shift usage of appliances like washing machines and dryers to cheaper hours. Smart meters, which track consumption by time of day, are crucial for these plans. The national program aims to equip all Israeli consumers with smart meters by the end of 2028, though they can be requested earlier. While switching is possible with a standard meter, options may be more limited.

Ultimately, there is no single cheapest tariff for everyone. Families with high daytime usage might benefit more from a constant discount, while those with significant nighttime consumption could find time-of-use discounts more advantageous. The market is evolving, with tens of plans offering various discounts, some exceeding 20%. The Electricity Authority has also taken steps to increase the energy capacity available to private suppliers, fostering competition that could lead to further improved offers.

Consumers considering a switch should verify discount hours, the necessity of a smart meter, whether introductory discounts are time-limited, and if the tariff is tied to other company services. Analyzing personal consumption history is the most reliable way to determine the best plan, as two families with identical annual usage can experience vastly different savings based on their daily routines. The transition is not permanent, as consumers can switch providers, encouraging ongoing competition.