Hevrat hashmal eng 2012

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The IEC has been leading the electricity sector for more than 89 years and
maintains and operates 17 power stations. It has an installed capacity
of 12,759 MW and 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. The Company
supplies reliable, high-quality electricity, and complies with leading
service standards, adhering to 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, the Company 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. The Company is expected to
complete the construction of three new combined-cycle units with a total
installed capacity of 1,118 MW in the Haifa and Zafit power stations by 2012.
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, an additional 377 MW was put into commission, fuelled
by natural gas, 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 25,625 km. of high-voltage grid lines; 45,868
distribution transformers with an installed capacity of 22,210 MVA; 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 into this area, despite
the assistance offered by IEC. In 2011, the installed capacity of IPPs has
totaled some 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, Company revenue increased by 24% compared with the previous
year and totaled some 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:
Moody's: Baa3/Negative Outlook
S&P's: BB+/CreditWatch Negative
ATTORNEYS S. Horowitz & Co.; Herzog Fox & Neeman Law Offices ACCOUNTANTS Deloitte Breitman, Almagor, Zohar & Co.
ADDRESS P.O.B. 10, Haifa 31000 TEL 972-4-8182222 FAX 972-4-8186100 WEBSITE www.iec.co.il
Line of Business
Electricity Generation,
Transmission, Distribution,
and Supply
Established 1923
Yiftach Ron-Tal
Chairman of the Board
Eli Glikman
President & CEO
The Company was rated in Israel (correct to May 14, 2012), as follows:
Midroog: Aa3/Stable Outlook
Maalot S&P: ilAA-/CreditWatch Negative
Capital raising: During 2011, the Company raised about Euro16M by
loans to finance emergency projects. It raised NIS 4B in Israel by private
issue of index-linked bonds to institutions and in December 2011, 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, the Company generated a total of 57.1 MWh, an increase of
1.9% compared with 2010. It generated 62% by coal, 32% by natural
gas, and the rest by fuel and diesel oil. Demand in the 2011 economy
reached 10,885 MW and peaked on July 31 at 10,450 MW (96% by
IEC). Electricity consumption totaled 53B KWh, 2% more than 2010. Low
electricity reserves still challenge the electricity generation system. When
the electricity reserve fell to levels of a few hundred MW, the public was
requested to postpone operating high-energy appliances to early morning
or late evening, and the response prevented the need for load-shedding
which would have caused electricity interruptions.
Natural Gas in the Electricity Sector
In 2011, IEC continued to expand the "natural gas revolution" and achieved a
total generation capacity of over 50% by natural gas. This is an unprecedented
achievement, both compared to developing countries and considering the
complexity of all aspects of the Israeli economy. Since the introduction
of natural gas to the electricity sector in Israel, there has been over 90%
reduction of sulfur dioxide and particle substance emissions, as well as 20%-
30% decrease in nitrogen dioxide emissions in gas-fueled power stations.
During 2011, Yam Thetys supplied 84% of the natural gas, but in October
2011, it reported a significant decrease in its ability to extract natural gas
from its reservoirs due to a depletion and collapse of some 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 natural gas supplied to the Company
(which is only 30% of the contractual quantity). As a consequence, most
IEC power stations are dual-fueled and are able to generate electricity even
when there is 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 natural gas for 15
years is subject to government approval. At the same time, permits for the
piping of natural gas 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 of natural gas until gas production begins from the
Tamar field and as a response to the anticipated periods of peak demands and
supply reliability. Company expenses for the purchase of fuels in 2011 rose
by 41% and totaled NIS 12.8B (NIS 9.1B in 2010) because of the change in
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the fuel mix used: a rise in use of diesel fuel (419,000T), fuel oil (127,000T),
and coal (427,000T), and a decrease in natural gas (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 DMS (Distribution Management System) 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 today, 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. To
this end, a national research and sample center for Smart Grid technology
was established to examine technologies, operating processes, and various
models towards implementation on a national scale. 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 passing 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 more than a decade, while the Electricity Sector Law
underwent numerous changes. In May 2009, the IEC Management and
the IEC Workers' Union agreed to begin negotiations with the relevant
government authorities. In September 2010, Company and government
representatives, Workers' Histadrut, and the IEC Workers' Union met to draft
an outline for the structural change. They agreed that the understandings
and agreements of the draft in all its components (structural change,
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 made to finalize the process in the very near future
by ways of a complex negotiating process in order to reach a consensus.
Business Development
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 Company
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 renewed
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 the heat of the sun 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 to prepare
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) invited inventors and entrepreneurs to
submit proposals for innovative technological concepts in energy and the
environment. In return, it will provide professional, financial, legal, and
strategic support to guide them to commercial success.
The Environment
IEC strives to include environmental concerns in all activities and adopts
advanced technologies to ensure continuous reductions in environmental
influences in the electricity chain, considering the principles of sustainable
development. In the sites of the coal-fired power stations, Orot Rabin in
Hadera and Rutenberg in Ashkelon, a NIS 8B project to reduce greenhouse
gas emissions was put in motion to reduce SOx and NOx emissions to 200
mg. per cubic meter (the value of emissions determined in "personal orders").
As of 2004, the Company has fast-tracked natural gas as the primary fuel
in the generation process to improve air quality and reduce greenhouse gas
emissions, while at the same time purchasing high quality reduced-sulfur fuels
(coal, diesel and fuel oil). These actions, together 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.
Community Involvement
IEC maintains a developed network of community work, believing it is its
obligation and responsibility to the community. Community involvement
throughout 2011 focused on promoting energy efficiency, with emphasis on
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 teaching civic duty for Arab and Jewish
youth, implementing 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 Netania; cooperation with
Ort Schools to create green leadership groups, stressing energy efficiency,
voluntary work, and community activity; general community activities in
Yokneam and Kiryat Yam to promote energy efficiency; 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
use of electricity by educational-fun activities. 2,000 kindergartens also
participated and 309 company employees and 35 retirees together with
parents of students in some 40 towns volunteered in this unique activity.
Risk Management and Continued Business Activity
Risks of all types – strategic, operational, financial, compliance, and
regulation – are an integral part of the business environment, work processes,
and business management of the Company and are exposed to external and
internal risks. The Board of Directors and the Company management have
adopted the directives of the 2009/1 Government Companies Authority
Circular relating to risk management throughout the company (ERM) and
the Company began implementing the risk management process. In 2010,
an overall risk survey was performed, a methodology was established to
accompany the subject, and a gap survey was prepared. During 2011, the
Company began the consolidation and readiness risk management stage,
which approved the organizational structure for risk management and a
"super policy" for risk management. Risk managers were appointed for the
fundamental overall company risks and 15 risk policy files were compiled.
Along with preparations for crisis situations, the Company 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.
Infrastructure
BdiCode ranking 2012
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