By Kalyananda Thiranagama
Executive Director- Lawyers for Human Rights and Development
On May 21 the opposition political parties and trade unions organised a joint protest against the electricity tariff hike claiming that it was unfair and a major blow on the majority poor. The government tried its best to control trade union action. However, according to media reports the first electricity bill received after the tariff hike created confusion and contradiction as some of those who had used below 60 units too were charged under the new scheme, which was against President Mahinda Rajapaksa’s promise. Amidst all these veteran human rights lawyer Kalyananda Thiranagama describes how the Ceylon Electricity Board (CEB) mislead the government and deceived the general public with its blatant lies about tariff increase.
CEB is misleading the government and deceiving the people when it says that it is incurring heavy losses because it is heavily subsidising electricity provided to the domestic sector and that it has no alternative but to increase the tariffs charged from domestic consumers and to achieve this target it has to adopt a cost – reflective tariff structure. CEB has never subsidised the domestic consumers consuming over 180 units per month. Even those who consumed 90 – 180 units were also only marginally subsidised. Only those domestic consumers consuming less than 90 units are subsidised if at all.
According to the Retail Tariff Proposal of the CEB for 2013, the average cost of supply of a unit of electricity (kWh) at the point of supply is Rs. 23.30. Even under the tariff structure that existed prior to April 2013, as shown below, the domestic consumers consuming over 180 units a month were paying a much higher price above the cost of supply for every unit of electricity consumed by them.
How the CEB is subsidising the Rich and the Affluent consuming tens or hundreds of thousands of units of electricity per month while sharking the middle classes
All along the Ceylon Electricity Board has followed a policy of robbing the less affluent and benefiting the rich and the affluent. In all tariff revisions introduced since 2002 the CEB has increased the electricity tariffs of domestic consumers by very high margins, while the electricity tariffs and charges of general service (business) sectors, hotels and industrial sectors that earned high income with electricity were not increased at all or increased by low margins.
Medium and large hotels, small, medium and large industries are provided electricity by the CEB at a cost much below the cost of production. As shown below, these subsidies granted to the medium and large hoteliers and industrialists who earn annual profits running into billions of rupees have resulted in heavy losses to the country and the economy.
On the other hand, it is the domestic consumers using over 181 units who have been compelled to bear the burden of subsidizing the hoteliers, industrialists and domestic consumers using less than 120 units. CEB makes huge profits by providing electricity at exorbitant rates to domestic consumers using over 181 units as shown below:
According to the Electricity Consumption Pattern – Domestic Sector – June 2012, there are 426,137 domestic consumers consuming 120 - 300 units per month. It is this group of consumers who are carrying the burden of subsidizing all the other categories of electricity consumers in the country. If the CEB is incurring heavy losses, why should it continue to provide electricity to hotels and industries at rates much below the cost of production?
Why should the CEB sell a unit of electricity purchased at a cost of Rs. 23.30, to
The arbitrary, capricious, unjust, unfair and discriminatory nature of tariffs imposed on different categories of electricity consumers by the CEB can be seen when the electricity bills required to be paid by different categories of consumers for the monthly consumption of the same number of units are compared:
Different Amounts charged by the CEB from different categories of consumers for their consumption of the same number of units
A domestic consumer consuming 180 electricity units a month for his basic electricity needs has to pay a much higher bill than a small, medium or large industry that consumes 301 units a month. A domestic consumer consuming 211 electricity units a month for his basic electricity needs has to pay a much higher bill than a medium or large hotel or small, medium or large industry that consumes 301 units a month. A domestic consumer consuming 211 electricity units a month is charged Rs. 1515/- more than a small businessman consuming the same number of units.
Is it in the ‘Mahinda Chinthana’ to impose excessive burdens on the poor and the helpless while granting all concessions to the Super Rich?
When one examines the new electricity tariff structure introduced with effect from April 20, 2013 by the Ceylon Electricity Board with the approval of the Public Utilities Commission of Sri Lanka, it appears that the CEB and the PUCSL are following a policy of granting real benefits, concessions and relief to the rich and the super rich, and of imposing excessive burdens on the middle classes while providing nominal and superficial benefits to the poorest.
Electricity tariff increases imposed on domestic consumers using less than 30 units and less than 60 units per month have been removed on a directive of the President granting them a relief. These two categories of domestic consumers were not much affected by the tariff increases. There tariffs had been proposed to be increased only by Rs. 75/- and Rs. 174.15 respectively
It is the domestic consumers using more than 90 units who have been mostly or worst affected by the tariff increases. As shown below, the existing tariffs of most of the domestic consumers have been increased by very high margins.
These groups of domestic consumers have not received any concession or relief from the CEB, PUCSL or the Government. Speaking about the relief granted on the President’s directive to domestic consumers using less than 60 units per month, the Minister of Power and Energy Mrs. Pavithra Wanniarachchi had stated that 51% of the domestic consumers have benefited thereby. What about the other 49% of the domestic consumers? Vast majority of them are not rich and affluent. They are persons belonging to lower and upper middle classes depending on their meager monthly salaries. Aren’t they citizens of Sri Lanka? Aren’t they entitled to relief and concessions?
The unit cost of small business men, small hotels and small industries has been increased by a 9.92%, 14.43% and 22.87% respectively. Unit cost of medium and large businesses, hotels and industries has been increased only by less than 8%. Unit cost of large businesses has in fact come down. While heavily increasing the tariffs charged from domestic consumers, the tariffs charged from the Religious Institutions have been further reduced by the CEB.
Even here it is rich and big religious institutions consuming a high volume of electricity (over 300 units) that have really benefited from the CEB new tariff policy. While the electricity bill of a religious institution consuming less than 90 units is reduced by just Rs. 72, a religious institution consuming 500 units gets a reduction of Rs. 1667. A religious institution consuming 1000 units gets a reduction of Rs. 4417/-
CEB providing electricity to Private Power Producers at a rate less than 1/3 of the purchase price
According to CEB Retail Tariff Proposal for 2013, “the average cost of supply on the basis of the CEB Budget at the point of supply under this proposal is Rs. 23.30 per kWh. A. E. S Kelanitissa (PVT) Ltd., is a private power producer producing thermal power for sale to CEB. CEB is believed to be purchasing a unit at the rate of US $ 0.20 (about Rs. 24.00) from A. E. S Kelanitissa (PVT) Ltd.
As shown by the CEB Electricity Bill relating to the Account No. 4270001917 of A. E. S Kelanitissa (PVT) Ltd.in March 2013 the CEB has provided 349,475 units of electricity at the rate of Rs. 7.15 a unit, (off-peak rate for I.P. III), less than one third of the purchase price. The total bill for 349475 units being Rs. 4,294,808.19, the total cost (inclusive of Fixed Charge, Fuel adjustment charge and Maximum Demand (kVA) charge) A. E. S Kelanitissa (PVT) Ltd has incurred for purchasing a unit of electricity from the CEB is Rs. 12.29. Under the new Tariff Scheme that will come into force with effect from April 20, 2013, A. E. S Kelanitissa (PVT) Ltd will be able to purchase a unit at the rate of Rs. 6.00 (reduced off-peak rate for I.P. III).