* Gaza's 2 mln residents get only four hours of power daily
* Energy crisis part of Palestinian Authority-Hamas dispute
* Israeli electricity supplies crucial for Gaza
* Pressuring Hamas, PA cut electricity payments to Israel
By Nidal al-Mughrabi
GAZA, June 19 (Reuters) - Israel began reducing its electricity feed to the Gaza Strip on Monday, deepening an energy crisis, after the Palestinian Authority limited how much it pays for power to the enclave run by the rival Hamas group.
The cutback, announced last week by the Israeli government, is expected to shorten by at least 45 minutes the daily average of four hours of power that Gaza's 2 million residents receive from an electricity grid dependent on Israeli supplies, Palestinian officials said.
The Palestinian Energy Authority said the Israel Electric Corporation (IEC) had cut by eight megawatts the 120 megawatts it supplies to the Gaza Strip over power lines.
An IEC spokeswoman confirmed a cutback had begun, in line with the West Bank-based Palestinian government's decision to cover only 70 percent of the monthly cost of Israeli electricity supplies to the Gaza Strip.
Last week, Prime Minister Benjamin Netanyahu's security cabinet gave the state-owned IEC the green light to implement the reduction, saying that Israel would not cover the shortfall in PA payments.
The Palestinian Authority said it had acted because Hamas had failed to reimburse it for the electricity. But the PA's move was widely seen as a bid to pressure Hamas to relinquish its hold on the enclave the Islamist group seized in 2007.
Any worsening of the power crisis - Gaza's main electrical plant has been off-line for two months in a Hamas-PA dispute over taxation of fuel supplies - could cause the collapse of health services, local health officials said.
Hospitals largely rely on generators for power, as do Gaza residents who can afford the high cost of fuel to run them.
(Additional reporting by Ari Rabinovitch in Jerusalem; Editing by Jeffrey Heller and Alison Williams)
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