CEB trying to recover loss of Rs 32 bn during drought by increasing electricity tariffs

By Rathindra Kuruwita

The Ceylon Electricity Board (CEB) wants to recover about 32 billion that the institution lost through the year, within the next three months, with a tariff hike, K.A. Noel Priyantha, Deputy General Manager (Business & Operational Strategy) said in a televised interview.

“On 15 February, 2023, we got a tariff increase. So for 45 days in 2023, we only got the 2022 tariffs. In June 2023, we proposed a three percent reduction of the tariff, but the Public Utilities Commission of Sri Lanka (PUCSL) recommended a 14 percent cut. We lost about 32 billion rupees in expected revenue because of these two reasons,” he said.

Priyantha said that the CEB had issues with PUCSL in the recent past and that it is only now that the relationship between the two institutions has improved.

“We expected rains, but there was a dry patch, and we had to release water from Samanalawewa for agriculture. We could produce less electricity from hydropower than we expected. We now need to produce electricity using fossil fuels. That costs more, and we can’t borrow now, so we need to go for a tariff increase. The IMF has insisted on cost-reflective pricing. We are trying to recover the 32 billion we have lost with the tariff hike,” he said.

The DGM said that the CEB only has three months to achieve its revenue targets. If PUCSL had only approved a three percent tariff reduction, there would have been no need to increase tariffs by a significant percentage.

“The CEB spends 2.80 rupees to produce a unit of electricity, using hydropower. The CEB is allowed to revise tariffs once every six months, but diesel prices are revised once a month. The average cost of a unit of electricity now is about 44 rupees,” he said.

Priyantha said they have forwarded two proposals to the CEB. One suggestion is to increase the tariff for a unit of electricity by eight rupees for all consumers. The other is a 22 percent tariff hike across the board, he said.

A few years ago, the CEB could have purchased a unit of electricity, generated by renewable sources, for around 22 rupees, he said. Unfortunately, some elements at the CEB were against local businessmen making money, and the solar power industry is now on the verge of collapse, Priyantha said.

“Moreover, we have not paid renewable energy producers in eight months. I always bring this issue up and some progress has been made. We are making some big investments. In Mannar, a 500 megawatt wind plant is coming up,” he said.

The CEB is also making space for a 200 megawatt solar power park. One of the main problems with renewable energy is the need to establish extremely costly transmission lines, he said.

“It doesn’t make sense to have a 10-megawatt renewable energy project. At least 100 megawatts need to be produced to make the cost of the transmission line profitable,” he said.

All solar farms connect to a specific point on the electrical grid, and that point is called the “point of interconnection,” or POI. The POI is different for utility-scale versus community solar scale projects, he said.

A community solar project is smaller than a utility-scale project. The project size is measured in terms of capacity. Community solar projects are typically 10 MW or smaller. These projects almost always connect to a three-phased distribution line. A distribution line is conceptually the same as a transmission line but moves electricity at a much lower voltage. A distribution line must be within about 1.6 kilometers of your property (or preferably much less) to make interconnection cost-effective.

Utility-scale projects connect by either connecting directly to a substation or tapping a transmission line (69 kV or higher).

Unless the solar farm is right next to a transmission line or substation, a dedicated transmission line called a generation tie (“gen-tie”) will need to be built. These gen-ties cost approximately one million dollars per 1.6 kilometers to construct, he said.

CEB Senior Engineers’ Association (CEBSEA) Spokesperson Engineer Nandika Pathirage said that reservoirs are receiving rain. On average, the water levels are at about 43 percent, and about 25 giga watt hours of electricity can be produced, he said.

“We only use about 11 gigawatt-hours of electricity. Now we only produce 40 percent of our electricity needs using fossil fuels,” he said.

Pathirage, however, denied claims that the PUCSL has recommended a 14 percent tariff reduction when the CEB has demanded only three.

“PUCSL decided based on the CEB data. When we asked PUCSL, they said that they, in fact, only gave what the CEB asked for. However, it is obvious that there is a cash flow issue now, and the CEB has now asked for a 22 percent tariff hike,” he said.

Pathirage said that the CEB management is of the view that they will not revise tariffs once the PUCSL approves the 22 percent tariff hike.

“We have received less rain fall than expected. The lowest probably since 2018. However, we expect that in the coming months, the north-eastern monsoon will fill up the reservoirs,” he said.