Consumers are unlikely to see an increase of their electricity bills this month as the Public Utilities Commission of Sri Lanka (PUCSL) remains uncertain on whether the regulator can complete the ongoing electricity tariff reviewing process by 15 February as instructed by the Cabinet.
PUCSL stance
PUCSL Chairman Janaka Ratnayake told The Sunday Morning that the commission would follow the stipulated mechanism when reviewing the proposed new tariff system and therefore it could not predict whether it would be able to complete it by mid-February.
“We are currently evaluating the proposed tariff mechanism. We will be conducting public consultations in the coming weeks and we are planning to complete the process while following the entire set of procedures as stipulated in the law,” he said.
The new tariff proposal of the Ceylon Electricity Board (CEB) expects a budgeted expenditure of Rs. 722 billion for this year and revenue of Rs. 434 billion at the prevailing tariff rates, with a forecast revenue increase requirement of Rs. 287 billion (66%).
Accordingly, from the proposed new tariff mechanism, the CEB is expected to achieve this 66% revenue enhancement from the estimated 14,920 GWh sales demand for 2023.
In January, the Cabinet approved a request by Power and Energy Minister Kanchana Wijesekera together with the President Ranil Wickremesinghe as the Minister of Finance to revise the existing electricity tariffs to reflect the current costs. It also instructed the PUCSL to study the proposal and, if any revision was required, to submit the same on or before 15 February.
Furthermore, the Cabinet requested the PUCSL to work jointly with the CEB to implement an interim tariff mechanism until the study was completed but the commission last week decided not to implement an interim tariff revision with a retrospective effect.
‘Scenario P’
Earlier, the Government was planning to implement the new tariff mechanism from 1 January.
As per ‘Scenario P’ (one of many estimated for 2023 based on demand and supply predictions) suggested by the CEB and finalised by the Cabinet to be implemented this year to avoid power cuts even during the upcoming dry season, the CEB had assumed an average hydrology condition with expected annual inflow of around 4,500 GWh, that the current GDP of Sri Lanka would drop by 4% and that electricity usage would follow the same.
As per the CEB’s proposed new tariff mechanism, the estimated average selling price of a unit is Rs. 48.74 and the estimated annual revenue is Rs. 727,212 million from the proposed tariff.
The average selling price at present is Rs. 21.07 per unit and annual revenue is Rs. 300,420 million. However, as per the present tariff mechanism, the average selling price in 2023 is Rs. 29.14 and estimated income is Rs. 455,699 million.
CEB stance
When contacted by The Sunday Morning, CEB Chairman Nalinda Ilangakoon expressed confidence over the newly-suggested tariff mechanism, saying it would enable the CEB to secure energy sources that it would need to go for ‘zero power cuts’.
While the CEB had temporarily suspended its load shedding programme, following court proceedings of last Friday (27), which saw the PUCSL take on the CEB, the CEB decided to go ahead with power cuts.
“We are very confident that the proposed tariff will be sufficient to purchase electricity to meet the shortage,” he said.
Ilangakoon went on to explain that the CEB was trying to go for least cost power generation and therefore it had limited thermal oil generation. However, during the upcoming dry season, it should save hydropower, he said, adding that therefore, the CEB had no option but to operate thermal oil power plants to meet the hydro gap.
“For this, we need money to purchase fuel from the CPC and since we were not given funds from the Treasury, a tariff hike that reflects the cost is essential,” Ilangakoon argued.
“The entire tariff that will be earned from the proposed tariff revision will be utilised for energy purchasing to provide an uninterrupted power supply to the public. There are allegations of mismanagement that occurred during the past in the CEB, however the tariff revision will not be used to pay those debts but to provide an uninterrupted supply,” the CEB Chairman stated.
Hike history
In August, the CEB introduced a 75% overall hike for electricity bills for the first time in nine years. However, some energy experts have opined that the CEB had failed to accurately calculate the electricity demand and generation cost when drafting the new tariff.
As per the last tariff revision, the Public Utilities Commission of Sri Lanka (PUCSL) approved increasing electricity tariffs by 75%. The tariffs were increased based on five unit categories, from 0–30, 31–60, 61–90, 91–120, and 121–180, by 264%, 211%, 125%, 89%, and 79% respectively.
However, as learnt by The Sunday Morning, in the August 2022 tariff revision, the CEB had requested Rs. 865 billion per year to supply uninterrupted power considering the external factors such as dollar rate fluctuations, fuel prices, etc. However, the PUCSL had approved only Rs. 505 billion – a decision that the CEB has said caused it to seek another tariff revision within a few months.
While the CEB has continued to incur losses to the tune of around Rs. 300 billion per year, it is anticipated that the total loss for 2022 will amount to around Rs. 152 billion.
As tweeted by Minister Wijesekera on 29 January, the CEB’s total outstanding amounts to key sectors are: Ceylon Electricity Board (CPC) – Rs. 112 billion; renewable energy suppliers – Rs. 40 billion; rooftop solar – Rs. 4 billion; private power plants – Rs. 80 billion; coal payments for February – Rs. 35 billion; and monthly interest on bank loans – Rs. 10 billion.