Workers at an apparel factory pictured during a power cut REUTERS
By providing this subsidy, the Ceylon Electricity Board will be able to avoid a large increase in tariffs for the category which consumes less than 60 units per month
Ceylon Electricity Board is targeting an annual revenue of Rs. 512 billion through this tariff revision
There are 3.14 million household electricity consumers who consume less than 60 units per month. It accounts for about 50% of the total household electricity consumers. The Public Utilities Commission of Sri Lanka has recommended to the Government to provide a subsidy of Rs. 65 billion to that category of consumers
PUCSL recommends that the price of an average unit of electricity should not exceed Rs. 28.14
The Ceylon Electricity Board has recently requested permission from Sri Lanka’s electricity regulator, the Public Utilities Commission of Sri Lanka (PUCSL) to raise its rates by 82% in 2022. As a compromise for the majority of residential electricity users, the PUCSL believes that the tariff rise should not exceed 57 percent. However, “We can’t bear the losses anymore, which is why this proposal is presented,” said the chairman of PUCSL during a media briefing held this week.
PUCSL decided to accept consultation from the general public on the proposed electricity tariff during a recent press conference. However, they are of the view that the tariff increase should not exceed 57% as a concession to the majority of household electricity consumers.
PUCSL chairman, Mr. Janaka Ratnayake said, “There are 3.14 million household electricity consumers who consume less than 60 units per month. It accounts for about 50% of the total household electricity consumers. The Public Utilities Commission of Sri Lanka has recommended to the Government to provide a subsidy of Rs. 65 billion to that category of consumers. By providing this subsidy, the Ceylon Electricity Board will be able to avoid a large increase in tariffs for the category which consumes less than 60 units per month.
According to the CEB proposal, the average monthly electricity bill for the category which consumes less than 30 units will be increased to Rs. 507. The average monthly bill for those who consume more than 30 units and less than 60 units, will increase to Rs. 1488. As a result of this subsidy, instead of such a tariff increase, the average monthly electricity bill for consumers below 30 units can be maintained at 227 rupees and the average monthly electricity bill for consumers more than 30 units less than 60 units can be maintained at 658 rupees. The Public Utilities Commission of Sri Lanka (PUCSL) points out that although a 138 percent tariff increase has been proposed for the entire domestic sector, it should not exceed 67 percent. The CEB also has proposed to increase electricity tariffs by 45 percent for general purpose consumers, 61 percent for industrial consumers, 43 percent for hotels, 43 percent for government agencies and 189 percent for places of worship
Explaining this further, Mr. Ratnayake said that the Ceylon Electricity Board is targeting an annual revenue of Rs. 512 billion through this tariff revision. However, the recommendation of the Public Utilities Commission of Sri Lanka is that the price of an average unit of electricity should not exceed Rs. 28.14. They also recommend that the Ceylon Electricity Board should reduce their operating costs by 10 percent by increasing its efficiency and use that savings to get more renewable energy for the system.
Mr. Ratnayake stated that they have been suffering losses in billions since 2017 and that by 2022 they are under a loss of 122 billion. They gave subsidies to CEB last year and the last seven years are all losses. Now we can’t bear the loss anymore which is why this proposal was presented. They explained that they are not looking for profit here but are looking to fill the cost.
Power cuts and state responsibility
When asked about whether they’ll go forward with their decision to not impose power cuts during online classes, Mr. Ratnayake said that if the government cannot run a school or a government institution, if they can’t give fuel, gas or rice, we are not going to dance to their tunes. They asked us not to cut power for two weeks and we did that. Just because the government closed schools because they have no fuel, he said that they can’t pump fuel and give them power. “If the government can’t manage these issues without endangering the lives of students and the general public, then we can’t take responsibility for that.” he said.
The chairman further stated that we can’t live without electricity forever. If the government is keeping this monopoly in their hands, then the government has to bear the cost and provide what is required to the public. This needs to be reconstructed otherwise this would be like a black hole where we would invest money over and over into this but don’t know where that money ends up.
“There are some ministers, who after receiving the post, they wake up the next day thinking that they know everything about the sector and subject they are assigned. They refuse to ask for advice and do whatever they want to do,” Mr. Ratnayake said. He stressed that there’s a method that the Public Utility Commission follows. We got experts and advisors and we consult them even when we hold media discussions. And for us, the most important part of whatever we do is the public consultation.
The PUCSL has observed that the conditions imposed on the Ceylon Electricity Board with the revision of tariffs in 2014 have not yet been fulfilled and points out that the cost and efficiency of the CEB could not be properly identified due to the failure of implementing those steps. Those conditions were:
1. Implementation of a proper agreement to generate and supply electricity from power plants owned by the Ceylon Electricity Board.
2. Implementation of a proper agreement method for electricity transactions between the Transmission and Distribution Divisions (between licensees) of the CEB
3. Introduction of a proper system for keeping separate accounts for the financial activities of the various divisions of the CEB (Generation, Transmission and Distribution) and determining the subsidy requirements.
4. Introduction of an independent audit system for the process of purchasing electricity
The PUCSL also urged CEB to accept the monthly electricity bills in dollars from the companies who earn their income in dollars. Thus, all customers who earn more than 60% of their revenue in USD would be required to settle their monthly electricity bills issued by CEB/LECO in USD. Examples of such establishments are,
-Manufacturing establishment who export products
-Marine and airline service providers
-Export oriented IT or other service companies
-Non-resident visa holders and diplomatic mission
-SLTDA registered tourist hotels, restaurants etc serving primarily foreign tourists.
Relevant information regarding the proposed tariff revision (Public Consultation Document) has been published on the website of the Public Utilities Commission of Sri Lanka. PUCSL requests all parties, including the public, to submit their views and proposals regarding the tariff revision. Written comments can be submitted by email or fax until July 18, 2022.
