- Bill formulated through collaborative process: CEB
The proposed new Electricity Bill mandates all licensees to enter into new Power Purchase Agreements (PPAs), some of which have been initially established through competitive processes.
Meanwhile, existing PPAs have been declared as valid for only nine months.
In Section 10 (f)(i) of Part IV, licensees are required to engage in PPAs with generation licensees and transmission service agreements with transmission licensees as specified in Section 11.
The bill states that all existing PPAs and Standardised PPAs valid and operational on the day preceding the appointed date and entered into by the Ceylon Electricity Board (CEB) will remain valid for nine months from that date.
The extension of this validity period requires approval from the regulator. During this timeframe, licensees must enter into new PPAs and transmission service agreements with the national system operator.
Additionally, licensees must take necessary steps outlined in the bill to obtain new licences, allowing them to continue as transmission licensees before the expiration of the nine-month period.
Furthermore, Section 10 (f)(ii) specifies that the formats for all agreements needed for power generation plants shall be as prescribed.
Nevertheless, a senior engineer attached to the CEB raised concerns over the provision, claiming that the bill required all licensees to re-enter new PPAs, some of which had been entered into originally following competition.
“The bill does not state that such new PPAs entered into should be on terms ‘not less favourable to consumers and transmission licensees’ than existing ones. As a result, the minister can intervene when new PPAs are entered into. New rates should be made more favourable to consumers than existing rates,” the engineer stated.
“A single upward adjustment of a unit of electricity by Re. 1 (Re. 1/kWh) can yield billions in profits per year; 17 billion units of electricity were generated in 2022. This provision allows for negotiation for new PPAs, inviting and opening doors for corruption unless a restriction is introduced.”
However, when contacted, CEB Spokesman Deputy General Manager Noel Priyantha stated that the process of formulating the new bill was a collaborative mechanism and everyone had been given an opportunity during the process.