Maj Gen Yoav Mordechai of the Israeli defense body COGAT, said today the move is due to "internal problems" between Gaza's Hamas rulers and Palestinian President Mahmoud Abbas. He did not say when electricity would be reduced.
Abbas has threatened to exert financial pressure on Hamas, his main political rival, and Palestinian officials said earlier this month payments would stop.
The Islamic militant group seized Gaza in 2007, driving out Abbas' forces.
Gaza has suffered increasing hardship since the Hamas takeover, which triggered a border blockade by Israel and Egypt.
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