The Israel Electric Corporation filed a 531 million shekel ($154 million) lawsuit last Thursday against the Jerusalem District Electric Company, the Arab-owned electric company that provides power to Palestinians in the West Bank and East Jerusalem, for not paying its debts.

The Palestinians have refused to pay for most of the electricity the IEC has supplied in recent years and the JDECO’s total debt to the IEC is estimated at 850 million shekels. Including the electricity supplied directly to the Palestinian Authority, the Palestinians owe the IEC an estimated 1.4 billion shekels, which is a serious burden on the IEC’s financial situation. The IEC has warned in the past that it might file suit to collect its unpaid debts, though for now the company has decided to sue only the JDECO, and only for some of the debt.

The IEC filed suit only after a long period of quiet contacts to find a solution, in an attempt to reach a compromise. A month ago there seemed to have been progress made on the matter, and Prime Minister Benjamin Netanyahu’s personal lawyer and representative to the peace talks with the Palestinians Isaac Molcho was in charge of finding a compromise.

The end of the peace negotiations seems to have also led to the end of the talks over the payment of the electricity bills.

The IEC wrote down some 150 million to 200 million shekels of the debt in its 2013 financial reports.

Six months ago, the Palestinian Finance Minister Shukri Bishara presented Israel with an offer that would have written off half of the debt and spread payment for the rest over 20 years. The offer was rejected out of hand by the Israelis. Sources say Israel agreed to the extended term of payments, but not to the haircut.

The IEC sells some 4 billion kilowatt hours a year − some 7% of its total electricity production − to the Palestinians. A quarter of this amount goes to the Gaza Strip, and the payment for this 1 billion kilowatt hours is taken out of the tax payments Israel collects for the Palestinians and transfers to the PA on monthly basis. The remainder is supplied to the JDECO or directly to PA-owned facilities in the West Bank − but the payment for this electricity is not enshrined in any agreement, and therefore Israel is not allowed to collect it directly from monies owed the PA.

The debt is growing at a estimated 90 million shekels a month, as for years the Palestinians have not collected the full amount they are owed by customers for the electricity.