Still in the dark about electricity pricing methods

In a notice dated January 8, 2012, the Public Utilities Commission of Sri Lanka (PUCSL) said electricity tariffs announced on December 30, 2010 would remain in place until further notice. The notice also said the Ceylon Electricity Board (CEB) and the Lanka Electricity Company Private (LECO) have submitted their revenue requirements for 2012, and there would be a public consultation to discuss the proposed tariff revisions. In a notice dated February 15, 2012, the PUCSL said there would be a Fuel Adjustment Charge (FAC) on monthly bills. It was stated that these notices were issued under Section 30 of the Electricity Act 20 of 2009.

Under the same Section 30 of the Electricity Act 20 of 2009, the PUCSL is expected to set tariffs using a cost-reflective methodology so that licensees can recover all reasonable costs. The PUCSL is also expected to provide subsidies and cross-subsidies financed by the Treasury, and set tariffs and charges that reflected such subsidies.

The PUCSL is also required to set a procedure for the review of licensee tariffs, including a timetable for such a review, and provision for consumers and other interested parties to participate in the review process.

The Electricity Act has been in force for almost three years. The PUCSL Act was passed in 2002, and the Commission has been functioning since 2003, almost nine years.

Despite all the lead time up to 2009, plus another three years, the PUCSL has failed to set costreflective tariffs and charges to be levied by licensees reflecting subsidies given or charged to consumers. If this is done, every consumer will be aware of the cost of supply and the subsidy received or charged to finance the subsidy to other consumers. The PUCSL has not informed the public about the subsidies provided by the government. There is no transparency in pricing.

On top of all this vagueness, there is a fuel adjustment charge (FAC) on monthly energy consumption, and that too differs with different consumers and consumption blocks. Domestic consumers who use more than 60 units are charged the highest FAC, at 40 per cent. These percen- tages appear to have been fixed arbitrarily. Responsible consumers will gladly pay their bills if we know what the real costs are, and the subsidies given.

Will the PUCSL please clarify the following: Were the tariffs set in 2010 sufficient for the Ceylon Electricity Board to recover its costs? What is the time table for the review of tariffs? Is it every six months or once a year? And what arrangements have been made for members of the public to participate in such a review? When will the PUCSL set tariffs reflecting costs and subsidies as required by the statutes quoted?we await the Commission’s early response.