Address: P.O.B. 10, Haifa 31000
Chairman of the Board
Education: Executive M.B.A., Bar-Ilan University (06); LL.B., The Faculty of Law, the Hebrew University of Jerusalem (91); Graduate of the Advanced Operations Course, National Security Academy of the Israeli Defense Forces.
Current Positions: Chairman of Board of Directors, Israel Electric Corporation Ltd.; Director, Maccabi-Dent Ltd.; Director, Israel Ports Development and Assets Company (IPC).
Past Positions: Chairman of the Board, Israel Ports Development and Assets Company (IPC) (07-10); Chairman & CEO, R-Ticam Ltd. - Investment & Consultancy Management (06-10); Commander, IDF Ground Forces (01-05); Chief of Staff, IDF Ground Forces Command (00-01); Commander, National Ground Forces Training Center (98-00).
Membership: Israel Bar Association (94).
Military Rank: Major General (Res.).
President and CEO
Education: International Executive Business Administration, Georgetown University, Washington DC; M.Sc., Financial Management, US Naval Postgraduate School, Monterey, California.
Current Positions: President & CEO, Israel Electric Corporation Ltd.
Previous Positions: Partner Communications Company Ltd. – Deputy CEO, SVP Customer Division, Head of Customer Service Division (05-10); CEO, Exel MPL (03-05); Director, Haaztmauth Bank of the First International Bank of Israel (04-06).
Commendations: US Legion of Merits; IDF Commendations.
Military Career: Colonel, Naval Attache' in the USA (99-02); Commander, Israel Navy Special Operations (97-99); diverse military roles in the IDF Navy and in Navy Special Operations (81-99).
Line of Business:
Electricity Generation, Transmission, Distribution, and Supply
he IEC has led the electricity sector for 89 years and maintains and operates 17 power stations with an installed capacity of 12,759 MW. It generates and supplies electricity to all sectors in Israel’s economy. IEC is a public company and 99.95% of its shares are government-owned. Its activities include generation, transmission and transformation, distribution, supply and sale of electricity. It supplies reliable, high-quality electricity, and adheres to leading service standards, complying with economic, commercial, and environmental principles. IEC employs some 12,500 people and provides service to 2.52M households.
2011 – Development Activities
Over the last decade, IEC has invested more than USD 9B to develop the electricity sector. Although it is a government company, resources are acquired by raising capital from independent sources, locally and abroad, and are not funded from the State budget . Due to the risks in reliability of the electricity supply as a result of the meager generation reserve, the Minister of Energy and Water approved additional generation units of 1,745 MW as part of the “emergency plan”. Already, two gas turbines of 236 MW have begun operating in Ramat Hovav and another four combined-cycle units (1,509 MW) will begin operating in two stages. In 2011, another 377MW was put into commission; fueled by natural gas (NG), in Haifa.
By the end of 2011, the transmission and transformation system included 740 km. of ultra-high power lines connected to nine switching stations, with a transmission capacity of 10,225 MVA; some 4,519 km. extra-high voltage circuits connected to 147 Company-owned substations with a transmission capacity of 14,875 MVA; and 41 private substations of 2,650 MVA. The distribution system included
25,625km. of high-voltage grid lines; 45,868 distribution transformers with an installed capacity of
22,210MVA; and 19,810 km. of low-voltage grid lines. The length of the high and low voltage underground lines reached 20,824 km., 53% of the total.
Independent Power Producers (IPPs)
As of 1996, the Electricity Sector Law has enabled IPPs to enter the field of electricity generation. Only a few have ventured, despite the assistance offered by IEC. In 2011, the installed capacity of IPPs has totaled 500 MW. The IEC National Dispatch Unit has advanced talks to consolidate agreements for cogeneration, conventional, and pumped-storage technologies. The Unit handled over 70 requests by entrepreneurs interested in building power stations, 45 using solar energy technology.
Revenue, Capital Raising and Company Rating
In 2011, IEC revenue increased by 24% compared with 2010 and totaled NIS 24.5B (approximately USD 6.4B). Nevertheless, the year ended with a
NIS 785M loss, mainly due to increased corporate tax.
The Company was rated abroad (correct to May 14, 2012), as follows:
1. Moody’s: Baa3/Negative Outlook
2. S&P’s: BB+/CreditWatch Negative
The Company was rated in Israel (correct to May 14, 2012), as follows:
1. Midroog: Aa3/Stable Outlook
2. Maalot S&P: ilAA-/CreditWatch Negative
Capital raising: During 2011, IEC raised about Euro 16M by loans to finance emergency projects and
NIS 4B in Israel by private issue of index-linked bonds to institutions. In December 2011, it took a NIS 1B loan from Bank Hapoalim.
Debt redemption: During 2011, the Company paid off some NIS 3,665M, of which NIS 2,595M were foreign bonds; NIS 228M government loans; NIS 82M secured loan bonds; NIS 555M loans from overseas banks; NIS 184M in loans from local banks, and
NIS 21M suppliers’ credit.
Electricity Demand and Peak Load
In 2011, IEC generated a total of 57.1 MWh, an increase of 1.9% compared with 2010. It generated 62% by coal, 32% by NG, and the rest by fuel and diesel oil. Peak demand in 2011 reached 10,885 MW of which 96% (10,450 MW) was generated by IEC. Electricity consumption totaled 53B KWh, 2% more than 2010. Low electricity reserves still challenge the generation system. When the reserve fell to a few hundred MW, the public was requested to postpone operating energy-intensive appliances to early morning or late evening, and the response prevented the need for load-shedding which would have caused electricity outages.
Natural Gas in the Electricity Sector
In 2011, IEC continued to expand the “NG revolution” and achieved a total generation capacity of over 50% by NG. This is an unprecedented achievement, both compared to developing countries and considering the complexity of the Israeli economy. Since introducing NG to the electricity sector in Israel, there has been over 90% reduction of sulfur dioxide and particle substance emissions, and a 20%-30% decrease in nitrogen dioxide emissions in gas-fueled power stations. During 2011, Yam Thetys supplied 84% of the NG, but in October 2011, it reported a significant decrease in its ability to extract NG from its fields due to a depletion and collapse of production wells. In December 2011, it reported an additional drop in generation and IEC was forced to purchase increased quantities of liquid fuels (diesel and fuel oil).
During 2011, as a consequence of the “Arab Spring” that brought about a change in the Egyptian regime, Egyptian gas began playing a significantly reduced role and totaled only 16% of the NG supplied to the Company (only 30% of the contractual quantity). As a consequence, most IEC power stations are dual-fueled and can generate electricity even in a gas shortage. During December 2011 and February 2012, the Board of Directors approved a partnership with the Tamar field, located 90 km. west of Haifa. The agreement for the purchase of NG for 15 years is subject to government approval. At the same time, permits for piping of NG to most of the generation sites were approved, and steps were taken to locate alternatives to store LNG to bridge the period of anticipated shortage until gas production begins flowing from the Tamar field and as a response to the anticipated peak demand periods and supply reliability.
IEC expenses for fuel purchase in 2011 rose by 41% and totaled NIS 12.8B (NIS 9.1B in 2010) because of the change in fuel mix: a rise in use of diesel fuel (419,000T), fuel oil (127,000T), and coal (427,000T), and a decrease in NG (about 458,000T).
Promoting Sensible Electricity Use and Energy Efficiency
In 2011, the Company continued promoting the national plan for economy in electricity use to prevent shortage management, to reduce the need for additional generation, and to instill sensible electricity-use habits. Efforts were made to expand the customer base that joined the load-demand management arrangement and activities took place with the local Authorities Center, the Israel Energy Forum, the Kibbutz Movement, the Manufacturers’ Association in Israel, etc. Further efforts were made to integrate installations based on renewable energies into the electricity grid and by the end of 2011, 5,700 small photo-voltaic units and wind turbines with an installation capacity of 180 MW were connected to the grid. Moreover, the first three IPPs for the medium photo-voltaic series were also connected to the grid.
The Distribution Management System (DMS) project was completed. This system is a real-time, integrated control and monitoring system with many advantages in safety, supply reliability, cost savings, and customer service. Two hundred automated units were introduced to the Company districts in 2011, and currently 3,400 units have been installed throughout the Company.
The Smart Grid project, defined by the Ministry of Energy and Water as one of the key items in the energy sector, was promoted during 2011 to the pilot stage by the 4,000 customers of Benyamina and Givat Ada. The Smart Grid is a multi-directional system whose function is to grant energy security to the electricity sector thanks to the vast flow of information which passes through it, while synchronizing a variety of systems.
In 2011, the IEC was awarded first place, for the 14th time, in the “the Test of the Nation” survey, by the Geocartography Company, as the public institution providing the best service.
Organizational Change and Increased Efficiency Plan
The structural plan in the electricity sector is a complex issue and has been on the agenda for over a decade, while the Electricity Sector Law underwent numerous changes. In May 2009, the IEC Management and the Workers’ Union agreed to begin negotiations with the relevant government authorities.
In September 2010, IEC and government representatives, Workers’ Histadrut, and the IEC Workers’ Union met to draft an outline for structural change. They agreed that the draft understandings and agreements in all its components (structural and organizational change, efficiency, financial strength, and workers’ rights) are subject to agreement.
To date, no agreement on the general issues has yet been reached and implementation of the structural changes has not started, but great effort is being invested to finalize the process in the very near future by ways of a complex negotiating process to reach a consensus.
IEC’s Business Development Unit markets its expertise to construct projects locally and abroad, and to convert this field into a significant source of income. The Company operates in business development within its licenses, but some of its initiatives require government approval. The IEC Business Development Unit is charged with developing large generation facilities by conventional and renewable technologies abroad. It also operates in small and medium-sized electricity installations, in the fields of renewable energies, energy efficiency, transmission and transformation projects, electrical cars, Smart Grid, etc. Furthermore, IEC is involved in the sale of by-products of the electricity generation process (coal ash, gypsum, etc.). Another activity is intelligent use of infrastructure and assets and sale of services, such as expertise, laboratories, and other resources.
In 2011, the Company began promoting two projects to construct solar farms in Bulgaria; the development of a wind farm in Romania; the development of a unique technology to generate electricity by solar heat in Israel; planning services in various projects in Israel, South Africa, Spain, and India; extensive repair work in the Haifa Oil Refineries; services to Mekorot; and consulting services to Mitrali and Bright Source Industries. IEC continues preparing for the charging systems of the first electric cars in Israel and promotes the tender to select partners for communication-by-optical fiber venture. The IEC Technology Incubator (KARAT) invites inventors and entrepreneurs to submit proposals for innovative technological concepts in energy and the environment. In return, it provides professional, financial, legal, and strategic support to guide them to commercial success.
IEC strives to include environmental concerns in all activities and adopts advanced technologies to ensure continuous reductions in environmental effects in the electricity chain, considering the principles of sustainability. In the sites of the coal-fired power stations, Orot Rabin in Hadera and Rutenberg in Ashkelon, a NIS 8B project was put in motion to reduce SOx and NOx emissions to 200 mg./cubic meter (the value of emissions determined in “personal orders”).
As of 2004, the Company has fast-tracked NG as the primary fuel in the generation process to improve air quality and reduce greenhouse gas emissions, while simultaneously purchasing high quality reduced-sulfur fuels (coal, diesel and fuel oil). These actions, with increased efficiency of the power stations by introducing modern combined-cycle units, led to an additional reduction in air pollutants. Furthermore, IEC completed the connection of 5,700 small photo-voltaic facilities to the electricity grid with a total capacity of 180 MW.
IEC maintains a developed network of community work, believing it is its obligation and responsibility to the community. In 2011 community involvement focused on promoting energy efficiency, emphasizing the customer’s responsibility as an active partner, alongside the Company’s responsibility as an essential utility provider. In 2011, it is worth mentioning the project to integrate students in industry, in collaboration with the Ministry of Education and the High-School Education System; the Sah-ten Project which deals with self-leadership and teaches civic duty for Arab and Jewish youth, implements dialogue and the principle of “Rights – giving and receiving”; a pioneer program for training “energy trustees” among students who excel in the sciences in the Sharet School in Netanya; cooperation with Ort Schools to create green leadership groups, stressing energy efficiency, voluntary work, and community activity; inaugurating the Shvil HaOr program in the Zikim Hof with the cooperation of the community and the Ashkelon Hof local council; integrating in the Maale Leadership Group, etc. 1,350 schools in 140 local authorities throughout the country participated in the Netiv HaOr program that promotes safety and sensible electricity use by educational-fun activities. Two thousand kindergartens also participated and 309 company employees and 35 retirees with parents of students in some 40 towns volunteered in this unique activity.
Risk Management and Continued Business Activity
Risks of all types are an integral part of the business environment, work processes, and business management of IEC that are exposed to external and internal risks. The Company has adopted the directives of the 2009/1 Government Companies Authority Circular relating to risk management throughout the company (ERM) and have began implementing the risk management process. During 2011, IEC began the consolidation and readiness risk management stage that approved the organizational structure and a “super policy” for the subject. Risk managers were appointed for 15 fundamental overall company risks. Along with preparations for crisis situations, IEC held a nation-wide emergency exercise to prepare for a war emergency and participated in national exercises, together with government ministries, the National Emergency Management Authority (NEMA), the Ministry of Energy and Water, and the Home Front Command.