The Cabinet-appointed committee on power sector reforms has recommended that the business of the Ceylon Electricity Board (CEB) Generation Division should be financially unbundled and taken over by separate corporate entities.
In the report submitted by the committee last month seen by The Sunday Morning, the committee has recommended that the separation be both asset-based corporate entity per generational unit and capacity-based (combining generation systems under one corporate entity), best calculated to achieve the key objective of appropriate market competition and ensure transparent costing and pricing.
The reforms committee has also proposed that the Mahaweli Hydro Power Complex, Laxapana Hydro Power Complex, Samanalawewa and other hydropower plants, Norochcholai Coal Power Plant, other thermal plants owned by the CEB (Kelanitissa, Sapugaskanda, Barge, etc.), and the Mannar Wind Power Plant should be owned and operated by separate and distinct corporate entities functioning as stand-alone companies.
Their ownership structures can also be decided based on energy type [e.g., hydropower, thermal, wind, etc.) or on their suitability for Public-Private Partnership (PPP), considering which plants need to be retired.
In addition, the committee has also proposed the discontinuation of the single buyer provision in the current structure, which restricts the sale of energy by the generators’ licences only to the transmission licensee, to introduce wholesale competition and open access in the future.
CEB currently holds six licences, including the transmission licence, which is also responsible for the bulk purchase (purchase from both CEB and privately-owned generation) as the ‘single buyer’ and bulk sales of electricity to CEB distribution licensees and LECO.
The transmission function and the bulk purchase and supply functions are different businesses with different risk profiles and there is no compelling reason to keep these businesses bundled together.
In addition, the committee has proposed the establishment of an Independent System Operator (ISO), which shall operate a transmission system to provide a non-discriminatory open transmission service for all generators.
It is proposed that the ISO should be a separate and independent legal entity with clear accountability to the regulator, generators, distributors, and consumers. Its accountability could be achieved largely by the publication of daily dispatch reports and accurate cross-boundary energy measurements.
The committee has also proposed that the functions currently performed by the National Control Centre should be absorbed by the ISO.