Discounted electricity to expand, but base tariff will rise

The discounted electricity tender for suppliers in January 2026 will be larger than originally planned, and a further tender is promised for July. As reported by “Globes”, the tender has been turned on its head: instead of a tender between power producers for the right to sell electricity directly to suppliers rather than to Noga – Israel Independent System Operator Ltd., the tender will be between the suppliers for the right to by discounted electricity from Noga, until 2029, when they will have to sign direct contracts with the producers.

In addition, the quantity on offer has grown from 350 MW to up to 500 MW in the tender that will take place in January 2026, with a similar quantity to be offered in July. This will make it possible to increase significantly the recruitment by the private suppliers of customers buying electricity at a discount, but there are those in the market who are disappointed at the quantity and would have wanted much more. The plan will also raise the price of electricity to all customers by up to 1%.

One of the greatest changes that has taken place in the electricity market is the supplier reform, which enabled power producers to sell at a discount via private suppliers. The result is that over 300,000 consumers are connected to private suppliers instead of to Israel Electric Corporation, and buy electricity at discounts of 5-7%, or up to 20% during off-peak hours.

Most of the electricity thus sold, however, comes to the suppliers from Noga, and only a minority of it is actually offered at a discount by the producers, from solar fields and new private power plants. Suppliers therefore have difficulty in buying cheap electricity, and all the companies in this area (Partner, Bezeq, Electra Power, Amisragas, Pazgas, Cellcom, and Hot) are running losses on the supply of electricity to consumers. Only some of them are currently trying actively to expand their customer bases. Between February and May 2025, the private suppliers recruited 85,200 new customers, but between June and September the number was less than half that, at 37,800.

The reason for the losses is that the suppliers can only buy a limited amount of electricity. Most of the power plants, including those privatized from Israel Electric Corporation, cannot sell electricity more cheaply to the suppliers. Instead, the suppliers buy expensive electricity from the system, where the price is an average of Israel Electric Corporation and the privatized producers, and sell it at a discount to consumers. That is to say, they are loss-making almost by definition.

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The Public Utilities Authority-Electricity seeks to change this situation, to take hundreds of megawatts of electricity from the central “pool”, of Israel Electric Corporation’s power plants and those of the companies privatized from it, and allow the private suppliers to buy it at a discount.

But while this will enable the suppliers to expand their customer bases, which currently represent 10% of domestic consumers and most business consumers, the other side of the coin is a 1% rise in the general electricity tariff on which the discount is offered. This is because the electricity tariff is an average of the power plants, some of which (mostly those privatized from the Israel Electric Corporation) are more efficient than others (mostly, those still in Israel Electric Corporation’s hands).

Published by Globes, Israel business news – en.globes.co.il – on September 29, 2025.

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