Consumer8/17/2026

New Wholesale Pricing Model Could Increase Electricity Bills

The Israel Electricity Authority and system operator Noga have published for public consultation a proposal to transition to the MCP wholesale pricing model starting in January 2027. In the short term, the reform could raise the tariff by approximately 0.5%, but the regulator estimates that it will strengthen market stability and lead to lower prices over time.

Key facts

•Bodies: The Electricity Authority and Noga
•Status: The proposed decision was published for public consultation
•Planned transition date: January 2027
•New model: MCP instead of SMP
•Additional burden: approximately 100–150 million shekels per year
•Estimated short-term tariff increase: approximately 0.5%

What Is Proposed to Change

The MCP model is intended to replace the SMP method currently in use. The price calculation is planned to take into account system constraints and electricity grid capacity in order to reflect the actual costs of electricity generation more accurately and correct existing distortions.

How Payments to Producers Will Change

The wholesale price that private suppliers pay power plants is expected to rise. At the same time, the proposal would significantly reduce additional payments to producers, which are currently transferred outside the market through regulatory protection mechanisms. In this way, the authorities aim to make expenses more predictable for producers, investors, and suppliers.

Oversight of Excessive Price Bids

The regulator also plans to limit exceptional price bids through oversight and a price cap. According to the examinations conducted, private power plants continued to submit inflated price bids unrelated to production costs. The Authority estimates that without advance controls, the new model could have led to an uncontrolled surge in prices.

Possible Costs for Consumers

The total additional burden on consumers is estimated at approximately 100–150 million shekels per year, an amount corresponding to a short-term tariff increase of approximately 0.5%. The regulator views this as the price of lower volatility, long-term certainty, and an incentive to establish new generation capacity. The Private Producers Forum supported revising the calculation method and argued that previous prices were too low and harmed competition.

What this means for you

For households, the change has not yet received final approval and is under public consultation. If the model is implemented in the proposed format, bills could rise slightly in the short term, particularly for customers of private suppliers; over the longer term, the authorities expect greater stability and the possibility of lower tariffs due to expanded generation.

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