The supply of power to Gaza works through a complicated mechanism that reflects the tangled relationship between Israel and the PA.
The World Health Organization estimates that at least 20 per cent of the Gaza population has a severe mental illness.
"It is time UNRWA be dismantled and merged with the United Nations High Commissioner for Refugees", Netanyahu said.
Israel's conservative leader then argued that the UNRWA does not mitigate the "refugee problem", but rather fuels it.
Chris Gunness, UNRWA's chief spokesman, told Reuters news agency that only the General Assembly, by a majority vote, could change the agency's mandate.
"UNRWA condemns the existence of such tunnels in the strongest possible terms".
The tunnel was come across on accident by United Nations members.
He said UNRWA would seal the tunnel, which was discovered while the schools were empty during the summer holiday. Hamas continues to encourage efforts by its operatives in the West Bank to carry out terrorist attacks against Israelis and has invested significant resources rebuilding its underground tunnel network and replenishing its missile arsenal.
The tunnel will be sealed by the UNRWA.
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Rejecting Netanhayu's statement about the tunnel as "baseless accusations", Hamas Spokesman Fawzi Barhoum insisted that Hamas has no connection to the tunnel.
But, for him, Hamas agreeing to do so could "avoid more catastrophes". Maj-Gen. Yoav Mordechai, the coordinator of government activities in the territories, did however recommend that Israel should grant the PA's request. "Perhaps it is time for the residents of Gaza to understand it themselves".
You can't blame Abbas for taking a tough line against Hamas.
Hamas has run Gaza since June 15, 2007, having seized it in a near civil war from Fatah following a dispute over parliamentary elections won by the Islamist movement.
According to Israeli media, the PA chose to cut electricity payments for Gaza in April.
This sentiment was shared on Twitter by U.N. Middle East envoy Nickolay Mladenov.
Qatar, a small and wealthy Gulf state, continued to support Hamas and a couple of times helped resolve Hamas' temporary lack of funds.
Israel, meanwhile, has started to build a subterranean barrier around the Gaza Strip to make it more hard for Islamist militants to use cross-border attack tunnels as they did in 2014, when the two sides fought a seven-week war in which more than 2000 Gazans and several dozen Israeli soldiers were killed.
The security demands included handing over 17 wanted men on charges pertaining to terrorism, protecting borders of Gaza and Sinai and cessation of weapons smuggling through tunnels into Sinai and security cooperation.