Sri Lanka utility regulator approves 75 percent electricity tariff hike

ECONOMYNEXT – The Public Utilities Commission of Sri Lanka (PUCSL) has approved a proposal by the Ceylon Electricity Board (CEB) to increase monthly electricity charges by 75 percent, effective Wednesday August 10.

PUCSL Chairman Janaka Ratnayake announced the tariff hike on Tuesday August 09, noting that different price plans will be applicable to different numbers of units consumed.

Ratnayake said the CEB is now permitted to increase rates by 264 percent to consumers who use below 30 units up to a maximum of 198 rupees, and from 30 units to 60 units by 211 percent to a maximum of 599 rupees. From 60 to 90 units, the increase will be by 125 percent.

This will be the first time electricity rates are increased in nine years. The CEB has faced steep cost increases since 2001 with rupee depreciation adding to costs. CEB diesel rupee cost went up 350% since 2013, coal rupee cost went up 650% ad furnace oil rupee cost went up 410%.

In June 2022, the CEB requested PUCSL approval to raise tariffs by 229 percent.

The PUCSL has imposed a number of conditions on the CEB for the rate hike. These include the opening of a bulk supply transaction account, a dispatch audit to be conducted before November 30, renewing supply contracts, updating documentation on distribution transmission, net metering for solar power users, and no bonuses for staff until CEB finances become stabilised.

Ratnayake said 100 million US dollars is needed to import coal after October. Base power provided by coal, he said.

Furnace costs have also risen, he said, noting that Sri Lanka currently generates 30 to 35 percent of electricity using fuel.

“With the rising global prices and war we need to increase tariffs because we produce a lot of electricity by burning fuel,” he said.

Meanwhile, local suppliers have to be paid 20 billion rupees, he added.

Tariffs are made according to the least cost based method. The tourism industry will get a special plan for tariff hikes.

People who earn 60 percent of income by dollars have to pay electricity bills with dollars, said Ratnayake.

“Power cuts are going on, rupee is depreciating, we are getting oil for high prices without a proper plan, so we didn’t want to raise prices as CEB has asked,” he said.

He claimed that in the CEB will be able to cover costs in the next six months. The Treasury has allocated 85 billion rupees to the CEB, he added.

“Till next January we might be able to manage the situation with less than three hour power cuts, depending on several factors” he said, commenting on the ongoing scheduled power cuts.

Ratnayake said Sri Lanka has 7.8 million electricity users, 6.7 million of which are domestic consumers. 1.1 million are general purpose, while 1.4 million consume under 30 units.

1.7 million use 90 units, while 4.8 million use fewer than 90 units each month, he said. (Colombo/Aug09/2022)