Israel Electric Corporation

IEC operates the infrastructure that transmits electricity from generating facilities, transforms it between voltage levels, and distributes it to consumers, alongside its continuing generation and supply businesses.[1] As of September 2025, IEC operated as an integrated and coordinated system encompassing generation, transmission and storage, distribution, supply, trading, and construction of related infrastructure.[4] Each activity operates under a license, and the corporation is classified as an essential service provider.[4]

The company’s stated purpose is to generate, transmit, and supply electricity to the Israeli economy in both routine and emergency conditions.[1] Its service objectives include availability, reliability, electricity quality, and adherence to economic, commercial, and environmental principles.[1] In 2021, IEC was Israel’s largest electricity producer and a dominant distributor, with an obligation to connect private, business, and public consumers to the grid.[5]

The company’s ownership and its relationship to capital markets are distinct: in 2020, the State of Israel held approximately 99.85% of issued and paid-up share capital, with the remainder held by approximately 120 individuals.[3] IEC was both a government company and a public company, but its bonds, rather than its shares, were traded on the Tel Aviv Stock Exchange at that time.[3] The Government Companies Authority, a Finance Ministry unit responsible for supervision, privatization, and structural changes in state-owned companies, oversees the corporation.[6]

IEC’s position has changed substantially as private producers and suppliers have entered the market.[7] Generation and customer supply have become competitive activities, while the corporation has remained a monopoly in the grid segments.[7] Electricity-system management has been transferred to Noga–Israel Independent System Operator Ltd., separating that function from IEC’s own generating and commercial operations.[1]

The corporation was incorporated on March 29, 1923, under the name Palestine Electric Corporation Ltd., with Pinchas Rutenberg identified as its founder.[3] His concession-planning work preceded incorporation: a surviving 1921–1922 letter concerns proposals for an electric plant in Palestine and is preserved alongside printed agreements with the Mandatory Government.[8] These documents record the planning and concession process rather than the start of electricity operations.[8]

Rutenberg’s initial proposal for a large generating station on the Yarkon gave way to a smaller diesel station on HaHashmal Street in Tel Aviv.[9] That station had two diesel units producing 300 kilowatts.[9] On June 10, 1923, when Tel Aviv had approximately 16,500 residents, Rutenberg switched on the transformer station at Magen David Square.[9] Streetlights and municipal water pumps received power first, with private homes connected subsequently.[9]

The start of supply also figured in contemporary debates about the concessions and Zionist development.[10] Telegrams exchanged during summer 1923 show Rutenberg pressing company officials to begin electricity supply before a British parliamentary debate.[10] He wrote, “It is essential to announce in Parliament on Monday that the supply of energy has begun”; the following day, station management reported that supply had started and hundreds of residents had been connected.[10]

The first Tel Aviv station expanded through the addition of diesel engines and generators, eventually reaching four megawatts.[11] During the 1920s, it served Tel Aviv, Jaffa, and surrounding communities, including Petah Tikva and Rishon LeZion.[11] As larger stations opened, the original plant became a reserve facility used during shortages; it ceased operating in 1957, and its restored building became an electrical substation in 1998.[11]

In 1926, the British Mandate authorities granted the company the Jordan Concession and endorsed to it the Yarkon Concession originally granted to Rutenberg.[3] The concessions received statutory validity through the Electricity Concessions Order of 1927, ran for 70 years, and expired on March 3, 1996.[3] They provided the legal framework for the company’s development before the Electricity Sector Law replaced the concessions system.[3]

The Naharayim hydroelectric station was inaugurated in 1932 at the junction of the Jordan and Yarmouk rivers.[1][12] Rutenberg selected the site for the rivers’ strong flow and the potential to regulate water storage in the Sea of Galilee.[12] The project supplied much of the electricity used in Palestine and represented a major expansion beyond the company’s early diesel stations.[12]

The Naharayim development occupied approximately 6,000 dunams purchased from Emir Abdullah, with electricity carried by two long lines to Haifa and Tel Aviv.[11] Its inauguration was followed by Haifa A in 1935, the company’s first steam power station, and completion of the first national high-voltage electricity grid in 1937.[1] Reading station in Tel Aviv opened in 1938, further expanding the generating system.[11]

In 1942, the Mandatory Government asked the Palestine Electric Company to assume responsibility for supplying Jerusalem after the British-Jerusalem Electric Corporation failed to meet the city’s electricity needs.[13] Naharayim was destroyed during the 1948 War of Independence.[12] The government purchased the company’s shares in 1954, and the corporation adopted the name Israel Electric Corporation Ltd. in 1961.[1][3]

The Electricity Sector Law, approved by the Knesset in 1996, established objectives that included reliable, available, high-quality, and efficient electricity service, energy efficiency, competition, and minimizing costs.[1] It regulated private production and envisaged separation among generation, transmission, distribution, and system management.[14] Because IEC operated across these segments, transitional provisions allowed it to continue doing so; those provisions were repeatedly extended, including through the end of 2015.[14]

On January 5, 1999, the Competition Authority’s commissioner formally declared the company a monopoly in electricity generation and sale, transmission and distribution, and backup services for consumers and producers.[3] Nevertheless, private production subsequently expanded, and IEC’s share of electricity sales to large consumers fell below 50% for the first time in 2016.[3]

In the 1999 electricity market, IEC dominated generation and distribution, while independent producers and imports met virtually none of Israel’s power needs.[15] The regulatory framework then permitted independent producers to generate up to 10% of the country’s electricity and another 10% of power requirements to be met by imports.[15] These allowances had not translated into a substantial alternative to the state company at that time.[15]

IEC completed a US$10 billion investment program in 2000 that increased Israel’s generating capacity from 8,000 megawatts to approximately 12,000 megawatts.[16] The country’s plants were then described as operating almost entirely on fossil fuels, with no nuclear power stations in operation.[16] On December 31, 2004, IEC’s installed generating capacity was reported at 10,083 MW, with 79.1% attributed to coal, 16.8% to fuel oil, and 4.1% to gas oil.[17] National electricity output in 2003 was estimated at 44.2 billion kWh and demand at 39.6 billion kWh.[17]

Israel’s historical isolation from international electricity networks and dependence on imported fuels shaped the sector’s development.[18] Coal was selected as a strategic energy source, while the later introduction of natural gas opened the way for private electricity producers and substantial structural change.[18] In 2011, natural gas accounted for 32% of electricity produced nationally and coal for approximately 62%.[19] Israeli power plants were also responsible for approximately half of national air-pollution emissions on average in that historical account; these were sector-wide figures rather than measurements of IEC alone.[19]

The government approved a structural electricity-sector reform in 2018 intended to increase competition, streamline the sector, and improve IEC’s financial profile.[20] Its principal measures included selling generating stations, opening electricity supply to competition, and transferring system management to a separate government company.[20] Approval followed a December 2017 agreement between the Finance Ministry and workers and approval by IEC’s board; the reform’s estimated cost was approximately NIS 7 billion over ten years.[20]

The December 2017 proposal envisaged selling older generation facilities at Eshkol, Ramat Hovav, Reading, Alon Tavor, and Hagit, with combined capacity of approximately 4,000 MW, described as half of IEC’s generation capacity.[21] It proposed retaining facilities such as Zafit and Gezer and dividing retained stations between two government subsidiaries.[21] Another element was the departure of 2,800 employees over eight years, at an estimated cost of NIS 5 billion.[22] The proposed framework also said IEC would not build new power stations and would remain a monopoly in transmission and distribution as supply gradually opened to competition.[22]

Separating system management addressed a structural conflict of interest: the unit deciding which generating stations operated was located within a company that generated electricity and conducted commercial activities itself.[21] Noga began operating as an independent system-management company in 2021.[7] The supply segment also opened to competition that year, with licenses issued to dozens of new suppliers.[7]

Government Resolution 3859 of June 3, 2018, preserved IEC’s monopoly in establishing, operating, and maintaining transmission and distribution networks.[23] Limited exceptions permitted private grid infrastructure in certain kibbutzim and Druze localities with historical distributors, the East Jerusalem distribution area, and certain private campuses.[23] The reform thus reduced IEC’s generation role without opening the principal public electricity networks to competition.[23]

Privatization proceeded through the disposal of individual power stations.[7] Alon Tavor was sold for NIS 1.9 billion in 2020, Ramat Hovav for NIS 4.26 billion in 2021, and Hagit East for NIS 1.6 billion in 2022.[7] Consumer tariffs were reduced by a cumulative NIS 4.6 billion during 2020–2022 following station sales.[7] Reading’s future required further consideration because of the complexity of its planning procedures.[7]

Eshkol was sold in June 2024 for approximately NIS 9 billion, reducing IEC’s installed production capacity by approximately 16%.[7] The company’s production share had already fallen from 84% in 2014 to 69% in 2018 and 46% in 2023, while private producers’ share rose from 16% to 31% and then 54%.[7] In 2024, IEC’s generation accounted for 40.6% of national electricity output.[1]

In 2024, IEC operated 42 generating units at 13 sites, with installed capacity of 9,474 MW.[1] For comparison, its installed capacity in 2023 was 10.1 GW, including 4.8 GW of coal capacity, against total sector capacity of 23.7 GW.[7] Facilities owned by IEC represented 44% of national capacity in that year.[7]

The company’s activities expanded to include energy storage from June 2024.[1] On January 26, 2025, its wholly owned subsidiary Netiv Ha’Or received a license to operate CCGT 70 for 24 years and 11 months.[4] The unit was transferred to the subsidiary and entered commercial operation after licensing, with its frequency-response tests completed and approved by Noga.[4]

The transmission network reported for 2024 included 1,071.1 km of 400 kV lines, 4,835.2 km of overhead 161 kV lines, 182.4 km of underground 161 kV lines, and 29.9 km of 115 kV lines.[1] It also included 13 switching stations and 154 substations.[1] Electricity travels from generating sites to these facilities and is transformed for delivery into the high-voltage distribution network.[1]

Distribution carries electricity from substations to consumers through high- and low-voltage lines and includes metering at customer facilities.[1] In 2024, IEC reported approximately 30,000 km of high-voltage distribution lines, 41,000 km of low-voltage lines, and 54,000 distribution transformers.[1] Public-area grid infrastructure and distribution networks in cities and moshavim are built and owned by the company.[23]

Connection approvals are divided between institutions: the system operator approves transmission-grid connections, while IEC approves distribution-grid connections under criteria established by the system operator.[23] Electricity losses during transmission and transformation have been estimated at approximately 6% of production.[23] Decentralized generation, which has gradually increased since 2010 and includes facilities connected near consumption areas, has helped reduce these losses.[23]

IEC reported supplying approximately 95% of residential consumers and 96% of business consumers in 2024.[1] Its supply operations encompass billing and customer service, including telephone assistance, in-person reception, and customer-account coordinators.[1] These commercial functions operate alongside the corporation’s responsibility for distribution infrastructure and metering.[1]

Competition initially reached different customer categories unevenly.[7] In 2023, private suppliers were associated with only 0.8% of low-voltage consumers, compared with approximately 81% of high-voltage consumers and half of medium-voltage consumers.[7] From the beginning of that year, the number of households associated with private providers increased by an average of approximately 30% per month.[7]

A change scheduled for July 2024 enabled customers without smart meters to switch suppliers, extending the option across approximately 3.1 million customers.[24] Previously, approximately 2.2 million customers with old meters could not switch, whereas those with smart meters could move their accounts.[24] Smart meters record consumption in half-hour intervals and transmit information to suppliers and the independent system operator; older meters are read periodically.[24] The company records 2024 as the year the supply segment opened to full competition.[1]

IEC’s smart-meter program aimed to replace consumers’ meters by the end of 2028.[7] Approximately one million smart meters had been installed by the end of August 2024.[7] The program’s stated objectives included improving reliability and electricity quality, supporting supply competition, enabling savings, and providing more effective monitoring.[7]

By July 2025, approximately 294,000 customers had switched from IEC to private suppliers.[25] Discounts generally ranged from 5–7%, with offers reaching 20% during off-peak hours.[25] Suppliers nevertheless reported difficulty obtaining enough inexpensive electricity, substantial dependence on purchases from the central grid, and, in some cases, losses associated with offering discounted supply.[25]

IEC’s financial debt stood at NIS 37.8 billion in 2023 and NIS 29.9 billion in the second quarter of 2024.[7] Following the Eshkol sale, financial debt and the debt-to-EBITDA ratio reached their lowest levels of the preceding decade in the first half of 2024.[7] The second-quarter debt-to-EBITDA ratio was 4.0.[7]

The Electricity Authority sets electricity tariffs and their updating mechanism under the Electricity Sector Law.[1] IEC is also subject to oversight by the Competition Authority, Securities Authority, energy and finance ministries, and Government Companies Authority.[1] Electricity is classified among critical infrastructure sectors subject to sector-specific restrictions on foreign control.[6]

IEC was among nine major government companies whose headquarters were considered potentially movable to Jerusalem.[26] The corporation had approximately 11,000 positions, although the number of headquarters positions was not known.[26]

Israel’s lack of connections to neighboring electricity grids makes the domestic network particularly important to continuity of supply.[2] Damage to domestic gas reservoirs or generating stations cannot be offset by relying on neighboring systems to meet demand.[2] IEC’s stated responsibility for electricity provision in emergencies therefore accompanies its routine obligations to consumers and the economy.[1]

The corporation also connects renewable generation built by others.[1] In 2024, it connected 8,689 new renewable-energy facilities with combined installed capacity close to 1 GW and reported approximately NIS 182 million in investment in grid development and renewable-facility connections.[1] Under applicable government decisions and regulation, IEC itself was not permitted to generate electricity from renewable sources.[1] Its role in the energy transition consequently included enabling renewable facilities to deliver power through its networks rather than owning renewable generation.[1]

By the end of 2024, independent producers accounted for approximately 62% of grid-connected capacity, reflecting a sectoral transformation spanning utility-scale generation, storage, and direct private supply.[27] Israel also committed approximately US$12 billion to expansion and modernization of transmission and distribution networks by 2030.[27] These changes accompanied the continued retention of a centralized grid even as generation and customer supply became more competitive.[7]

Palestinian electricity debt became the subject of an agreement signed in September 2016 by Israel’s Finance Ministry, the Coordinator of Government Activities in the Territories, and the Palestinian Authority, represented by its civil affairs minister.[28] Accumulated debt to IEC had reached approximately NIS 2 billion; the agreement cancelled NIS 500 million and sought repayment of the remainder.[28] It also assigned the Palestinian Authority responsibility for collecting electricity payments and maintaining and developing the Palestinian electricity network.[28]

The 2018 restructuring generated political and labor-related objections.[29] After IEC, the Histadrut, and the Finance Ministry reached a collective agreement in May 2018, MK Bezalel Smotrich urged that the process be halted, arguing that it was unlawful and required cabinet and Knesset discussion.[29] The cabinet nevertheless approved the reform unanimously in June after a contentious debate.[30] Prime Minister Benjamin Netanyahu supported the agreement while criticizing the power of workers’ committees, and a Jewish Home minister also voiced criticism.[30]