Report Reveals 13 Billion Shekel Loss and 1,800 Excess Employees at Israel Electric Corporation

A recent report has highlighted significant financial and operational challenges facing the Israel Electric Corporation (IEC), revealing an estimated economic loss of 13.2 billion shekels due to delays and budget overruns in its power generation projects over the past decade. The report, prepared by BDO, criticizes IEC's attempts to re-enter the power generation sector, from which it had committed to withdraw under a reform agreement that granted the company 7 billion shekels in compensation.

The report points out that IEC is seeking to replace about 4,300 megawatts of capacity expected to retire by 2040 and is pursuing initiatives in gas turbines and energy storage. However, these moves are seen as a gradual return to power generation, contradicting the reform's terms that barred IEC from building new plants or replacing existing ones. While the availability of combined cycle power plants sold under the reform has improved significantly, adding roughly 1,400 megawatts of effective capacity valued at around 8 billion shekels, IEC's own generation projects have suffered from costly delays.

One notable example is the construction of units 70 and 80 at the Orot Rabin power station, where delays caused at least 4.6 billion shekels in economic damage, according to the State Comptroller's June 2026 report. The report also reveals a disparity in profitability within IEC, with the generation and supply segments accumulating losses of about 5 billion shekels since the reform, while the regulated transmission and distribution sectors remain profitable.

Additionally, IEC has not met its workforce efficiency targets, employing approximately 11,100 workers in 2025 instead of the targeted 9,300, resulting in an estimated annual salary cost of 1 billion shekels for the excess 1,800 employees. Private producers argue that these findings justify continuing the sale of IEC power plants and preventing its expansion in energy storage, urging regulators to uphold the reform and keep IEC focused on transmission and distribution rather than generation.

The report also notes deferred regulatory accounts totaling around 9 billion shekels at the end of 2025, representing costs recognized but not yet fully recovered through tariffs, which may impact future electricity prices.