The Israel Electric Corporation Ltd.

The Israel Electric Corporation (IEC) is a public and government-owned company, generating and supplying electricity to all sectors; approx. 99.85% of the shares are government-owned. Its activities include the generation, transmission and transformation, distribution, supply, and sale of electricity to customers. The company owns and operates 13 power stations with 42 generating units, including steam-driven, gas turbines in combined cycle, industrial gas turbines, open and jet streams. Its installed capacity in 31.12.2024 was 9,474 MW. IEC supplies reliable high-quality electricity, complies with leading service standards, maintaining economic, commercial, and environmental principles. As of the end of 2024, IEC employs 10,055 employees and provides services for about 2.987 million customers.

Development Activities

Over the last decade, IEC invested approx. NIS50Bn in developing the Israeli electricity sector. Although IEC is government-owned, this capital is raised from independent sources in Israel and overseas. The 161 KV super-high overhead and underground lines totaled 4,835 km; 115KV lines - 30km; and the 400 kV extra-high lines - 1071 km. The transformation system includes 13 switching stations and149 substations owned with IEC. By the end of 2022, the installed transmission capacity totaled in approx. 19,486MVA. By the end of 2024, the distribution system included 31,698 km. of high-voltage lines; 55,758 distribution transformers of total capacity 28,818 MVA, and 43,150 km. of low-voltage lines.

Smart Grid and Smart Metering

Smart Grid – a concept based on integrating bilateral communication, controlling and monitoring information systems, and combines manufacturers and demand management, decrease or inversion, and will contribute to energetic efficiency and a decrease of greenhouse gas emissions, improving safety, reliability and flexibility. The main technology is using smart electricity meters. Real-time regional electricity status is supplied on two operational levels: the network and the customer’s meter. This technology will greatly benefit Israel’s energy sector. The Smart Meters is a central part in the revolution of a smart electrical grid, for which IEC is preparing for.

Integration of Renewable Energy Sources

The company’s 2030 long term plan adheres to government goals: enlarging electricity production goals with renewable energy to 30% by 2030, including adding technologic means to manage and supervise the renewable energy facilities and maintain the electricity grid’s stability during decentralized production. The company promotes energy storage projects, supporting the combination capacity of renewable energy sources to large scale electric production. The dynamics of entering and exiting the grid of decentralized producers of renewable energy presents many operational challenges, which the company faces using diverse means while improving service to all the players in Israel’s energy sector.

Revenue, Capital Raising and Company Rating

In 2024, IEC revenue totaled NIS 26,184. The year ended with a profit of NIS 3,361 million.

Company credit rating overseas (correct to 31.12.2024):

1. Moody’s: Baa2/ Negative outlook (lower than the previous year). 2. S&P: BBB+ Global Rating/Stable outlook (same as earlier year).

Company rating locally (correct to 31.12.2024):

1. S&P Maalot: ilAAA/Negative outlook. 2. Midroog: Aa1.il/Positive outlook (higher than previous year).

 Electricity Demand and Peak Load

A peak demand for 2024 occurred on 27.7.2024. In 2024, 34.9% of electricity was generated by coal; 64.7% by natural gas & LNG; 0.3% by diesel oil; and 0.1% by fuel oil.

Natural Gas (NG) in the Electricity Sector

As of the end of 2024, the company maintains three natural gas sources: “Tamar” field, “Leviathan” field, and “Karish” field. As of the end of 2024, approx. 46.4% of the company’s total installed production is by units which are capable of working on natural gas.

Promoting Intelligent Use of Electricity and Energy Efficiency

IEC maintains long term cooperation with various parties in the community that corelate to its business core, including safety and intelligent use of electricity, science and technology, sustainability, and energy efficiency. The company’s educational activity focuses on the company’s core activities, especially safety and social responsibility. The company aims to lead to a correct electric use culture within educational programs, and responsible advertising. One of the goals is to lead behavioral & awareness related change in the community and turning participating pupils into ambassadors who expand the span of effect.

Structural Change, Organizational Change and Efficiency Plans

On May 10, 2018, understandings regarding the outline of principles related to the structural change for an eight-year period were reached. The outline was approved by the company’s BOD. On June 3, 2018, the outline was approved by the government, and on July 19, 2018, the Knesset passed the amendment to the Electricity Market Law. including the restructuring outline, the government’s decision regarding the reform, the amendment to the Electricity Market Law, the Energy Minister’s policy principles and the company’s board’s decision. The main actions performed within the framework of the implementation of the structural change: In 2019, the sale of “Alon Tavor” was finalized, and a conduction supervision array began working. In 2020, the sale of “Ramat Hovav” was finalized, and a subsidiary was founded – “Nativ HaOr”, which is constructing two gas turbines in a combined cycle. On Nov. 1st, 2021, the company sold all the activity of the system’s management unit to “Noga” and ceased to act as the manager of the electric system. In 2022 the sale of “Hagit East” was finalized and a draft of the agreement to transfer area D (of the Rotenberg site) to Israel Land Authority was approved. As of the end of 2024, the agreement has yet to be signed. In accordance with the regulation determined by the Electric Authority, the supply section is due to open for competition fully at the beginning of 2024. In 2024 the sale of Eshkol power station was completed. In addition, the company began promoting the construction of accumulation facilities and is in an essential process of restructuring and efficiency plans, according to which the company’s employees’ number will decrease.

Service

IEC believes that customer service is a central value, and strives to incorporate personal, responsible service and technologic innovation, with longstanding commitment to improve customer service and optimal service. The company maintains a regular dialogue in various channels, including frontal, phone and digital, and continues to expand its services to the changing needs in order to improve the customers’ experience. The company operates service channels, including: * Customer relation desk at the company’s service centers and at service stations in local authorities in hybrid service facilities nationwide. * 103 telephone centers – personal service in Hebrew and Arabic, * digital tools – Facebook, twitter, Instagram, online chat and text messages. The company’s website and application offer self-service actions 24/7 in Hebrew and Arabic.

The Communication Venture

IEC is associated with IBC – Israel Broadband Company since its establishment in July 2013. Since 1.8.19, IEC holds 30% of IBC’s shares and a partnership of Cellcom and IIF-HOT holds 70%. IEC executes design and optical cable deployment on electricity infrastructure and grants IBC exclusive rights to use company infrastructure including allotment of broadband on IEC’s optical network. IEC supplies design, optical network deployment and connections to buildings based on existing overhead and underground electricity infrastructures in numerous cities. IBC provides domestic and business customers with broadband communications services ranging from 100 Mpbs symmetrical bandwidth. Moreover, IEC provides IBC with infrastructures for hosting communications rooms, storage and logistics services.

Innovation

The unit strives to drive the company towards the future challenges of the energy sector and technological innovation. The company’s innovation is four-fold: open innovation, joint work with startups in technological pilots, as IEC provides the program’s platform & specialty, meaning the infrastructure & electric network while the startup provides its technology.

Research & Development - The company creates unique technological solutions for challenges that lack existing market solutions, leveraging external R&D partners or collaborating with leading institutions. In this context, “A call for collaboration” was issued to academia, resulting in partnerships with top-tier universities.

Investments in Breakthrough Technology Companies - Aimed at integrating cutting-edge technologies into the company’s core operations.

Inter-organizational entrepreneurship via various platforms, from social platforms, an innovation community, employee training regarding technological innovation and accelerator courses and workshops, inter-organizational entrepreneurship greenhouse, as its products are due to be patented and commercialized in the future. In addition, the unit initiates the foundation of platforms through which innovation is promoted, including: (1) Experimental Site & Innovation Lab, establishing a physical power distribution network that simulates the company’s operational grid. (2) Israel’s First Smart and Sustainable Neighborhood, integrating and testing advanced smart-grid technologies within a diverse urban fabric of residential energy consumers and producers. (3) Technology Incubator, professionally focused on addressing the future challenges of Israel’s energy sector.

Environment Protection

IEC is responsible & committed to act to protect the environment & reduce damage along the electric chain, & works according to a sustainable, long term & future-oriented environmental vision, reducing the environmental repercussions stemming from its activities in order to prevent damage. The company adopts advanced environmental measures, for smart use of raw materials reduction of pollutants emission. Moreover, the company works to enhance cooperation with environmental entities & maintains a dialogue with relevant stakeholders. The company works according to the environmental protection principles policy affirmed in 1997 & its updates. The total investment in environmental facilities in 2024 was NIS579 million, NIS501 million of which invested in environmental aspects of the production section, & in NIS78 million in conduction sectors, distribution and special projects. The company is continuously setting goals regarding the environment and acts according to environmental laws and regulations and global trends, alongside its technological ability and the unique conditions throughout its facilities. The company joins the national effort to reduce greenhouse gas emission, and works to expand the use of natural gas, reduce the use of coal, establish production units in combined cycle and turn coal units for natural gas use as a main fuel.

Community Involvement

The activity within the community presents a strategic tool for creating “communal value”, maintains social or environmental value for stakeholders for the business side, while reflecting the company’s core values & its commitment to act in accordance with corporate responsibility principles. IEC maintains long term cooperation with various parties in the community, including safety & intelligent use of electricity, science & technology, sustainability & energy efficiency. This cooperation is characterized by listening to the community’s needs, while maintaining constant dialogue and social responsibility. The company’s educational activity focuses on the company’s core activities, especially safety & social responsibility. The company aims to lead to a correct electric use culture within educational programs regarding mainly safety.

Risk Management and Business Continuity

The company operates according to the directives of the Government Companies Authority and according to Risk Management policy, defining modes of operation, supervision and report, including using a computerized data system, in order to minimize the risks whole obtaining the company’s goals in various areas. As part of risk management & ensuring business continuity, IEC continues to prepare & practice response proceedings. Every six months, a committee of deputy CEOs gathers, headed by the chief risk management manager in order to discuss risk management, including matters defined by the guidelines from the Government Companies Authority. In addition, once a quarter, the company reports to its BOD’s budget committee, financial management and risk management regarding state of risk management status at the company, including essential events, breaches in “risk appetite” statements, etc. Once a year, the Board of Directors conducts a review regarding the risk management framework, including the company’s risk management policy and related work plans.

Preparing for Emergencies/Crises

During 2024, IEC transitioned to an “emergency operations” mode in light of Iron Swords War. Emergency command centers were activated, daily internal status assessments were conducted, and ongoing coordination was maintained with the Ministry of Energy and the Electricity Authority (NOGA). The company worked continuously to repair damage to the electricity infrastructure caused by the conflict and to restore supply to customers as quickly as possible, while maintaining the highest level of employee safety.

Stockpiles of fuels (coal and diesel), equipment, and repair tools were increased to ensure rapid response capabilities.

The company worked in close collaboration with the Ministry of Energy’s Emergency, Security, Information, and Cyber Divisions, the Electricity Authority (NOGA), and other national guiding bodies, the company analyzed updated war scenarios and defined corresponding response measures. Operational plans were developed to address reference scenarios while meeting service targets, appropriate equipment was procured, secured, and protected, personnel were trained to implement the plans, and transportation means were verified for availability. Field exercises were also conducted to confirm the feasibility of operational plans within the required timeframes. Throughout 2024, the company enhanced its emergency operations approach, establishing dedicated emergency command centers, appointing specialized personnel teams to operate them, implementing comprehensive employee training programs, and evaluating operational concepts through targeted exercises. Additionally, measures were taken to embed personnel into emergency roles, and strengthen operational continuity in the electricity sector, activated an organizational and personal resilience system, conducted training, exercises, and drills for employees and systems for various scenarios, and drew lessons from real events and exercises, monitoring their implementation.

The company continued to improve physical protection at critical sites for the continuity of electricity supply. At the same time, it worked to improve and expand active defense at its critical facilities in cooperation with the National Emergency Authority, Ministry of Defense, IDF, and Air Defense Division, in light of current and future threats that could endanger company facilities and sites. Defense systems were deployed at company sites (power plants, substations, and switchyards) according to priorities and suitable site conditions.

During 2024, the company worked on earthquake and tsunami preparedness through a management steering committee and four subcommittees. The company is preparing for climate change and extreme weather events - a steering committee led by the CEO was established, subcommittees led by vice presidents, and defining reference scenarios for different weather phenomena. The company defined activities to reduce risks to its facilities from extreme weather events and to ensure, as far as possible, uninterrupted electricity supply during them, and will implement these measures with the Ministry of Energy, Electricity Authority, and NOGA.

The company continued its activities in security, firefighting, and rescue teams for immediate response, including the resources required for emergencies.