The Public Utilities Commission: should it go or stay?

On December 1, 2020, Presidential Secretary P.B. Jayasundera wrote to Treasury Secretary S.R. Attygalle to close down the Public Utilities Commission (PUC). This, Jayasundera wrote, was necessary ‘to create an efficient work environment to implement the power generation plan which has been lagging behind for some time.’

Jayasundera observed that the PUC Act could be eventually incorporated into the Consumer Affairs Authority and Ceylon Electricity Board (CEB) Act.

The letter irked SJB MP Harsha De Silva, who tweeted, ‘This can NOT be happening; UNBELIEVABLE in modern times. CEB n connected private produce have got Pres @GotabayaR to SHUT DOWN t#SriLanka power regulator Public Utilities Commission. This just after @TimesOnlineLK expose’ on Kerawalapitiya opening t door to massive corruption.’

Quite a mouthful, even for someone given to shooting his mouth AND keeping it shut over the horrendous things that happened in the ‘modern times’ of his Yahapalana Government. It’s up to the CEB to respond to the corruption charges, but De Silva has zipped his lips over much of the corruption, nepotism and incompetency of his friends when he was a minister in the previous regime.

So we have ‘PB’ claiming the PUC is a stumbling block. We have De Silva ‘tweetimplying’ that the PUC is squeaky clean and that the CEB is a dirty outfit. Assuming that the PUC is playing truant here, PB’s directive is puerile. The solution has to be what’s suggested at the end of his letter to the Treasury Secretary - amending/repealing the PUC Act. Transferring out staff to make the outfit inoperable is childish. So too is the scrambling of regulatory functions.

The PUC is a regulator. A regulator sets up guidelines. Those being regulated are required to adhere to the same. PUC’s history shows that in the early years, i.e. under the first Director General Priyantha Wijetunga and later Ranjith Perera, things were relatively smooth. Both individuals were highly respected. The rules were clear. There may have been disputes, but the clarity of the guidelines and the integrity of the regulator were of an order that there was little room for complaint.

Things started going downhill in 2009. An unsolicited power project by a local business entity in conjunction with a Malaysian investor had been submitted. The then minister had insisted that the PUC facilitate matters. Perera resigned. The agreement was inked, preposterously, in his name. The signatory was rewarded. Today, the investor, KLS Energy has sought damages from the CEB to the tune of US$160 million!

What happened thereafter? Perhaps an analogy might help paint the picture. Suppose you want to build a house. You have your property, you have the design, you need to obtain approvals from the local government authority which has to ensure that you have not violated regulations such as zoning laws. Fine. Now, what would you say if the local government authority asks you a myriad questions at its leisure (one today, another one two months later)? What would you say if the local government authority asks your neighbors, the garbage collector, the fish vendor and others you interact with to offer suggestions regarding your construction plan? What if the local government authority says, ‘to hell with your plan, here’s ours, use it!’?

Well, that’s what the PUC has done for several years now. First, let’s take foot-dragging. There have been inordinate delays in approving Long Term Generation Plans (LTGP) submitted by the CEB. The PUC took 14 months to approve the 2015-2035 plan, 13 for the 2018-2037 plan and is sitting on the 2020-2039 plan, submitted in May 2020. Needless to say that delays have ripple effects, they wreck transmissions plans and it’s the consumer who gets short-changed.

The second LTGPs referred to above is a case in point. The PUC, in violation of the Electricity Act No. 20 of 2009 and the PUC’s own Least Cost Generation Expansion Panning Code, essentially came up with a plan of its own. Now it is preposterous for a regulator to act as a parallel electrical utility that it’s supposed to regulate, but that’s exactly the role the current PUC has defined for itself. It’s like a judge submitting him/herself to judgment and finding him/herself innocent.

For example, the PUC sought public views on the CEB’s LTGP. Like most of the operations of this PUC, it seems above board, transparent and all that. It can mislead too!

Consider the fact that the plan is the result of several months’ worth of deliberations and is of a highly technical nature. Who in ‘the public’ has the expertise to comment on such a complex document? ‘The stakeholders!’ so says the PUC. Well, they are ‘interested parties’ obviously and their comments need to be measured in terms of what’s in it or not in it for them. This is not to say that ‘national interest’ is not their thing, but it’s certainly not Mr/Ms Random Interested Citizen’ offering comments here. What does he/she know of modeling tools used to prepare the plan, for example?

In any event, even if we set aside the delays such exercises cause, the PUC does not have a mandate to solicit such opinions. All that the PUC should do is to check if guidelines and planning codes have been followed. Perhaps the PUC members don’t feel up to the task, and if so they shouldn’t be there in the first place. The composition of the PUC is another issue that needs to be addressed, but let’s leave that aside. The Attorney General’s Department has clearly determined that the PUC has no mandate to call for public views with regard to the LTGP. In other words the seemingly transparent moves, ironically, are a cover for off-mandate operations. The PUC is playing a political game that it has no authority to indulge in.

When the PUC’s illegal LTGP was shot down, it had to approve the CEB’s plan, but with an interesting caveat: ‘Subjected to the accommodation of already Cabinet approved “government to government power plants.” There’s no provision in the Electricity Act for such external interjections; perhaps all members of the PUC, now and hereafter, should follow a mandatory workshop on the relevant laws. The AG’s Department could facilitate this. In fact it would be good for the planners in the CEB to attend as well. It would, in the very least, save a lot of time.
Now, Harsha’s corruption allegations regarding Kerawalapitiya and the CEB’s alleged being hand-in-glove with private producers are serious. The CEB has to respond. He has tagged the President as well. His argument is that PB’s move against the PUC was part of a plan to rob. The PUC, he tweetimplies is standing in the way.  Harsha, who has academic credentials, would do well to peruse all the activities of the PUC as well as relevant correspondence with the CEB and the AG’s Department. He could also read the PUC Act and the Electricity Act. It might add much needed sobriety to his twittering.

So, what’s the solution? Do we do away with the regulator or do we amend the Act or clean up the PUC? PB’s way seems a short-cut and it sets a bad precedent. The PUC can and should be reconstituted. The current PUC’s operations, especially the arrogance, duplicity, illegality and absence of professional ethics demonstrated by the present DG, calls out for examination. In De Silva’s shorthand, ‘it can NOT be allowed to continue.’ The discontinuation, however, must follow established procedure. Going around it is bad news. That which, as one might argue, is prompted by good intention, if replicated when intention is pernicious can only produce bad results. We don’t need that.

No one should be unbridled, not the PUC, not the CEB and not anyone else. A regulator is not bad news. The history of the PUC prior to 2009 demonstrates this. You need people who understand utilities and who can read, understand and stick to mandates without arrogating extraordinary powers upon themselves, which can delay the approval and subsequent implementation of national plans.

The PUC, i.e. the institution, should stay. The PUC, i.e. the personnel? Well, they’ve not exactly covered themselves in glory, although Harsha De Silva, in his haste and perhaps on account of party-blinders, might think otherwise.

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