Israel Electricity Authority Proposes $1.4 Billion Recognition for New Power Units
Israel's Electricity Authority has proposed recognizing approximately NIS 5.1 billion (about $1.4 billion USD) in costs for the construction of two new generation units at the Orot Rabin power station in Hadera. This figure is slightly lower than the NIS 5.3 billion requested by the Israel Electric Corporation (IEC), with the authority citing delays and overruns attributable to the company.
The two units are combined-cycle gas turbines, built as part of a reform in the electricity sector to enable the phasing out of older, coal-powered units at the same site. Originally slated for operation in June 2022 and March 2023, the units experienced significant delays, with Unit 70 commencing operation in January 2025 and Unit 80 in January 2026, a delay of over two and a half years.
The authority's review found construction cost overruns of about NIS 300 million. The delays also incurred additional costs to the economy, estimated in the billions, due to continued reliance on coal power and its associated environmental and health impacts. However, the authority decided against imposing penalties on the IEC for these indirect damages.
Instead, the authority's stance is that the public should not bear the costs of delays and overruns stemming from factors within the IEC's control. While acknowledging delays caused by external events like the COVID-19 pandemic, the Iron Swords War, and Operation "House of Weeds," the authority proposes not to recognize costs related to internal issues, supplier management, and schedule management. This includes approximately NIS 120 million in accrued interest during construction and an additional NIS 100 million in investment cost overruns.
The proposed recognized cost of NIS 5.1 billion includes interest and linkage during construction. As the electricity sector operates on a closed financial system, recognized costs are ultimately passed on to consumers through electricity tariffs. The proposal is currently open for public comment before a final decision is made.
