The Ceylon Electricity Board (CEB) is making all necessary arrangements to cut electricity tariffs to help lessen the burden on consumers, particularly low- and middle-income families.
This would be the first tariff revision under the present government and is likely to be announced within weeks. This decision has been taken in response to public representations on the high cost of electricity.
The Energy Ministry and the CEB are jointly working on a proposal for the tariff reduction, assisted by representatives of the International Monetary Fund.
Early last week, on November 21, the IMF officials had consultations with officials from CEB and the ministry regarding the process. At the end of these consultations, a formal proposal is expected to be submitted to PUCSL, the Public Utilities Commission of Sri Lanka.
In October, the CEB had suggested a tariff reduction of 6.6 per cent, which PUCSL had rejected as inadequate.
The PUCSL has asked for a new recommendation, addressing its several objections including low fairness and transparency in calculations of the CEB.
It has ordered the CEB to provide printed bills to customers upon request and to conclude an agreement with the CPC on fuel procurement for generating power.
In spite of challenges like increased fuel prices and operational costs, the CEB has remained profitable to make these tariff reductions possible. Revenue for the CEB from sales of electricity rose 5.9% in 2024 to Rs. 314.4 billion, buoyed by increased demand.
Besides, direct generation cost fell by 32% on account of favourable weather conditions and decrease in coal prices. It accordingly translates into a gross profit of Rs. 99.7 billion in the first half of 2024 from losses the previous year.
While the improved financial position of the CEB justifies the tariff cuts, the challenge on its hands lies in striking a delicate balance between affordability and increased costs of energy generation.
The formula of the Electricity Tariff, under the purview of PUCSL, factored in the costs – fuel price, generation and distribution expenses. However, it complicates with the reliance on fossil fuels and volatile macroeconomic conditions.
The CEB’s ability to lower tariffs highlights its strong financial recovery, which should provide relief to consumers while ensuring the utility’s financial health. However, maintaining affordable tariffs in light of the country’s economic challenges will continue to be a delicate balancing act.
