Israel Electricity Authority Opposes Generation's Acquisition of Shikun & Binui Energy Over Competition Concerns

The Israel Electricity Authority continues to oppose the acquisition deal in which Generation seeks to purchase Shikun & Binui Energy's power plants, despite the agreement being signed. The main assets involved are the Hagit Mizrach and Neot Hovav power stations, currently owned by Shikun & Binui and set to be transferred to Generation. This deal follows Generation's separate transaction with Rafek Energy, where Generation exchanged its stake in the Alon Tavor power station for Rafek's shares in the Reindeer station, resulting in Generation no longer holding Alon Tavor, one of the four major private power plants in Israel.

The Electricity Authority remains concerned that the merger reduces competition in the electricity market and increases market concentration, potentially leading to higher prices. These concerns were initially raised when the memorandum of understanding was signed in May, with doubts about regulatory approval from both the Electricity Authority and the Competition Authority. Officials emphasized that although Generation no longer owns Alon Tavor, the merger still combines two competing entities, diminishing competition.

Electricity prices from private power stations are set through bids submitted every half hour, and the Authority prefers each station to be owned by a single player to avoid increased bargaining power from partnerships. However, they oppose a scenario where a few players control multiple stations. The Authority has engaged in informal discussions with the buyers for several weeks, reviewing various proposals to address competition concerns, but remains skeptical and cautious about the deal.

Generation, which will hold the Reindeer station, included a clause in the agreement allowing it to sell its stake in Reindeer to Nofer Energy, owned by Ofer Yanai, before completing the Shikun & Binui acquisition. Nofer currently owns 47.5% of Reindeer, with the remainder held by Generation.