PUCSL approves 75% average electricity tariff hike

• New tariff structure comes into effect from today
• Rejects 183% and 229% hikes proposed by CEB
• Says entire cost burden not transferred to consumers
• Points out 75% of consumers are still subsidised despite new revision
• Says steps have been taken to encourage and promote renewable energy generation
• Industries and tourism sector to receive a 1.5% discount if bills settled in US dollars

By Shabiya Ali Ahlam 
The Public Utilities Commission of Sri Lanka yesterday announced its decision to allow the Ceylon Electricity Board

(CEB) to revise upwards the overall electricity tariff by an average 75 percent, which would come to effect from today. 
The electricity sector regulator said the revision was made following an open and transparent consultation with the public and businesses. The hike, which comes at a time when the country is grappling with escalating cost of living, is made for the first time since a tariff revision in 2014. 

“I would like to point out that we have taken steps to increase a reasonable tariff rate. The commission decided to approve a fair electricity tariff, taking all these public and other stakeholder comments into consideration,” said PUCSL Chairman Janaka Ratnayake addressing a press conference, yesterday. 

The CEB has been pushing for the PUCSL to approve 185 percent and 229 percent tariff hikes at different occasions and both proposals have been rejected. 
He explained that while it costs Rs.32 to generate a unit of electricity at present, the entire cost burden is not imposed on electricity consumers to protect the majority of consumers in the domestic sector.  
According to the new tariff revision, the category with consumption of less than 30 units will be charged 25 percent of the cost, which is a 75 percent subsidy extended. 

The consumers falling under the 31 to 60 units consumption will be charged 40 percent of the total cost, gaining a 60 percent subsidy.
Those falling under the 61 to 90 units consumption will be charged 50 percent of the cost, receiving a subsidy of 50 percent. 

“I must emphasise that 75 percent of the electricity consumers are still being subsidised, even with the new tariff revision. Steps have also been taken to encourage electricity consumers to promote renewable energy generation with the tariff revision decision,” said Ratnayake. 
While large consumers will feel the pinch of the new electricity tariff, increasing the cost of production further, the PUCSL chief opined that the increase in US dollar value over the last nine years serves as a cushion for industries in this case. 

“The industries in the export sector will not be greatly affected by this electricity tariff revision,” he said.  
Instead of going forward with the 116 percent tariff increase proposed by the CEB for industries, hotels and general-purpose sectors, the PUCSL has approved a tariff increase of 39 percent for the public sector and a 75 percent increase for the industrial sector. 

Meanwhile, the crisis-hit tourism sector players will face a 50 percent increase in their electricity bills. According to Ratnayake, the remaining 50 percent tariff increase will come into effect in another three months. The delay is to provide an incentive and relief to the tourism sector, so that some support is given to facilitate its recovery.
Further, a 1.5 percent discount will be provided for the tourism and export sector, if the bills are settled in US dollars. 

When questioned on the possibility of a downward revision taking place in the near future, Ratnayake said such scenario depends on the global oil and coal prices. 
He assured the revision would take place in a consultative and transparent manner, so the public is well informed.

No bonuses for CEB if it doesn’t deliver: PUCSL

While the PUCSL has partially given in to the repeated demands of the CEB to increase the electricity tariffs, the utility regulator said that the entity must get its act right and deliver positive financial results, else the year-end bonuses should not be paid. 

“The CEB has got what they wanted. Now they cannot complain. They can and should go forward with their work and ensure a continuous power supply. Failing to do so, we will not allow for their bonuses to be paid,” said PUCSL Chairman Janaka Ratnayake. 

“Though many claim the CEB is run by a mafia, we don’t think so. There are professionals working there, so I am sure they understand. Only well-managed profitable entities receive bonuses, not mismanaged loss-making ones,” he added. 

Although the PUCSL has approved an electricity tariff hike, the CEB is expected to meet several conditions presented by the regulator.
Some of the conditions include revising the sales and purchase agreements of interest for security deposits obtained from consumers, conducting an independent dispatch audit for 2021 and opening a bulk supply transaction account. 

With the new tariff structure and improved management, Ratnayake said the CEB is expected to cover the costs in the coming six months. The CEB has said its revenue requirement is Rs.505 billion and the tariff hike is expected to generate a revenue of Rs.512 billion.