• Minister hints at possible tariff hike
• Tariffs depends on thermal oil consumption: CEB
• Next tariff hike expected by 1 June

The next electricity tariff will be determined by the severity of the drought conditions in the country until June and the extent of thermal (oil) usage for electricity generation, according to the State-run Ceylon Electricity Board (CEB).

In response to a statement made by Minister of Energy Kumara Jayakody that Sri Lanka’s electricity tariffs could increase in the coming months due to the impact of ongoing dry weather on power generation, CEB Spokesman Eng. Dhammike Wimalaratne said that according to the current regulations in the country, tariff adjustments were required every six months.

Noting that these adjustments could result in an increase, decrease, or no change in the rates, he added that the decision would be made by the Public Utilities Commission of Sri Lanka (PUCSL) based on recommendations from the CEB.

Jayakody has warned that prolonged drought conditions are driving up electricity generation costs, which may lead to a tariff revision.

However, Wimalaratne stated that the CEB would review all costs from the past six months before deciding on any tariff changes during the next revision, which would take place in six months. 

“The current situation is tough, especially with the ongoing drought, but rainfall is expected around the end of April or early May. During droughts, we rely more on thermal power plants, like the coal plant, which is currently generating 900 MW, especially at night when solar energy is not available. Solar power helps during the day, but we lack storage infrastructure, so nighttime power mainly comes from thermal plants,” he noted.

“These plants use fossil fuels like coal and liquid fuel. Besides the coal plant, we also use the naphtha plant, which is the next cheapest option. Other plants may be used too, but we try to keep them at low capacity unless needed. We are managing the power supply with this mix of energy sources and hope conditions improve by May or June.”

He observed that the cost of electricity production was likely to keep rising until the rains arrived. 

“If there are heavy rains in the next few months, the situation could improve. However, since the monsoon is expected in May, production costs will likely stay high until then. As we follow a cost-recovery tariff system, these higher costs will need to be covered by raising tariffs. The PUCSL will make the final decision after six months, but without significant rainfall, electricity production costs will keep increasing,” he added.

The Ministry of Energy has stated that an electricity tariff revision is expected in June, but the direction of the change – be it an increase or a decrease – remains uncertain due to unpredictable weather conditions.

Ministry of Energy Secretary Prof. Udayanga Hemapala meanwhile stated that comments made by the Minister regarding future tariff changes were personal opinions and that the ministry was yet to conduct any official calculations. 

He explained that electricity tariffs were reviewed every six months, with the last revision in January and the next one due after May or June.

“As of now, we cannot confirm whether the tariff will increase or decrease,” Prof. Hemapala stated. “It largely depends on weather conditions, particularly rainfall levels. Since we are still in March, we must wait a few more months before making an official determination.”

He noted that if the revision was scheduled for 1 June, the CEB would typically submit its proposals to the PUCSL by the end of April, after which the PUCSL would decide on any adjustments.

Addressing Sri Lanka’s renewable energy targets, Prof. Hemapala reaffirmed the Government’s goal of achieving 70% renewable energy generation within the next five years. However, he emphasised the technical and financial challenges associated with expanding the renewable energy sector.

He explained that renewable energy generation cost between Rs. 15 and Rs. 20 per unit at present, but when factoring in battery storage, the cost could rise to Rs. 50 per unit. 

Additionally, renewable energy sources are inconsistent; wind power is only available for about five to six months a year, while solar power is limited to daytime hours. As a result, fossil fuel-based power plants, such as thermal and diesel generators, are required to supplement the energy supply, especially at night.

Sri Lanka currently operates 21 hydropower plants with a total installed capacity of 1,441.7 MW. However, the dry conditions have reduced their output to around 20% of capacity, compared to approximately 60% during the rainy season. 

This sharp decline has increased dependence on thermal and other higher-cost power sources, putting pressure on overall electricity costs.