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Electricity tariff revision: PUCSL turns down Cabinet decision
View(s):By Sandun Jayawardana
Power sector regulator the Public Utilities Commission of Sri Lanka (PUCSL) has informed the Cabinet that there is no legal basis for it to comply with a Cabinet request to implement the electricity tariff revision proposed by the Ceylon Electricity Board (CEB) with effect from January 1 as an “interim measure.”
The regulator conveyed this in writing to the Cabinet Secretary on Friday, its Chairman Janaka Ratnayake told the Sunday Times.
The PUCSL has noted that there is no legal provision that allows it to approve a backdated electricity tariff revision or approve a revision as an interim measure. Mr. Ratnayake said there were many flaws in the CEB’s proposed tariff revision.
On Monday, the Cabinet approved a proposal for the PUCSL to further study the CEB’s proposed tariff revision and submit any suggestions the regulator believed were necessary before February 15.
Until then, approval has been given for the PUCSL and the CEB to jointly take necessary measures to implement the CEB’s proposed tariff revision from January 1 as an “interim measure” in accordance with the amendments to the Public Policy Guidelines now in force regarding the power industry. If the PUCSL submits any amendments, the CEB will take steps to implement those amendments and make the necessary adjustments to future monthly electricity bills, the Cabinet decided.
The PUCSL on Friday called for public consultations on the proposed tariff revision submitted by the CEB. The CEB’s budgeted expenditure is Rs. 722 billion with revenue of Rs. 434 billion at the prevailing tariff. It has forecast a revenue increase requirement of Rs. 287 billion. Accordingly, the CEB has proposed to raise tariffs by 66% to meet this revenue requirement.
In its proposal for a tariff revision submitted to the PUCSL on January 5, the CEB claims that while the last electricity tariff revision on August 10 last year has eased the cash flows of the CEB to a certain extent, it is not sufficient to achieve a full cost recovery level. It adds that the CEB is in an extremely difficult position to honour the payments to procure coal and other fuels for the coming months. Meanwhile, the Board has been informed to operate without government subsidy and to eliminate intentional power cuts this year.
CEB Chairman Nalinda Illangakoon highlighted this during a media conference on Thursday, stating that the Board’s proposal sought to provide uninterrupted electricity again to consumers.
This could not be done without raising tariffs in terms of the proposal, given that the CEB had been instructed to operate without government subsidy from January 1, he said.
“We are under severe financial constraints when paying for coal shipments. Banks are not allowing us to open letters of credit until we raise our tariffs sufficiently to a point where we are no longer incurring such colossal losses,” Mr. Illangakoon claimed.
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