New electricity tariff:

Move to save energy

By Gamini WARUSHAMANA

“The high cost of electricity will encourage industries and domestic consumers to shift to renewable energy sources and energy saving options,” said Secretary General of the Ceylon National Chamber of Industries(CNCI), Kumar Kandalama. He said that the tariff increase on domestic users will encourage them to reduce electricity waste and use energy-efficient methods.

The CNCI calls upon the government to revise electricity tariffs on industries. They said all industries, specially SMIs will find the new electricity tariff structure a burden.

Kandalama said that the CNCI discussed the issue with the Public Utilities Commission (PUC) and the Ceylon Electricity Board (CEB) and the Chamber presented the grievances of the industrialists.

Even a 3-4 percent electricity tariff increase is a burden on industries and the maximum we expected was 5-6 percent.

However, there is a 15 percent increase.“We held three discussions and during these discussions we were made to understand that there is a huge gap between the cost incurred by the CEB in electricity generation, distribution and revenue.”

“The Government cannot subsidise this gap forever. However, we pointed out the need to reduce corruption and waste in the CEB and reduce cost of generation by balancing the generation mix and avoiding over dependency on thermal power,” he said.

Kandalama said that manufacturing industries in continuous operation such as biscuit manufacturing, apparel and high electricity consuming industries such as ceramics will be badly affected.Some SMIs are exploring the possibility of running their industries using their own generators and avoid using electricity from the national grid.

Opposition parties, trade unions and civil society organisations criticised the new tariff structure because the highest tariff increase is for low-end domestic users.

Allowing the tariff revision, the regulator, PUC, has imposed several conditions on the CEB including installing despatch planning software, setting up a bulk supply account, having power purchase agreements with those who own generators and striking long and medium-term contracts for coal.The CEB hopes to earn Rs. 223 billion in revenue with this tariff hike and it is Rs. 45 billion more than the earlier tariff.

However, the CEB will incur a Rs. 33 billion loss in 2013 with total operational cost of Rs. 256 billion. Last year the CEB incurred a Rs. 61.2 billion loss.

The huge losses of the CEB create pressure on the Treasury in maintaining macro economic stability.