Cites drop in demand, lower exchange rate and fuel prices as compelling and justifiable reasons for a downward revision
Regulator’s strong case for reduction comes a week after Power and Energy Minister indicating tariff will be reviewed and revised in July
The Public Utilities Commission (PUCSL) yesterday demanded an immediate 20% reduction in electricity tariff citing drop in demand, lower exchange rate and fuel prices as compelling and justifiable reasons for such a move In a statement PUCSL Chairman Janaka Ratnayake said that the electricity users should receive an immediate electricity tariff reduction of approximately 20% given the fact that electricity usage has dropped (following upward revisions in the past year), reduced exchange rate and fuel prices.
He revealed that according to the tariff requested by CEB on 5 January this year, CEB had estimated an electricity demand of 16,520 GWh for 2023, expecting a revenue of Rs. 722 billion for CEB, from energy sales. But PUCSL forecasted generation demand of 15,031.42 GWh for 2023.
“Our demand forecast has been proven right by actual demand for January to April and reduced demand forecasted by CEB for the rest of the year. According to CEB’s revised demand forecast, total demand for the year 2023 will be 15,377 GWh which is very close to the demand that we forecasted early this year,” Ratnayake said.
“This was the main rationale in our staff’s tariff recommendation which limited a tariff increase below 35%,” PUCSL Chief emphasised.
Pointing to the official statistics, Ratnayake said those prove the 35% tariff increase suggested by the staff of PUCSL is in par with the actual demand forecast which didn’t materialise due to the majority of the Commission members approving the CEB proposal as it is.
“The latest forecast by CEB shows a reduction of 6% from the initial forecast in January (5/1/2023). Actual data shows in months March and April, the actual generation to be 10% and 8% less than the initial forecast by CEB,” Ratnayake said. Accordingly, the latest forecast is also on the higher side and actual demand for 2023 can be even lower.
“Therefore, the actual total revenue of 2023 for the distribution licensees could be lower than Rs. 658 billion. If we were able to implement PUCSL’s staff recommended low tariff hike, we wouldn’t need frequent tariff revisions and such low tariff will ensure and stimulate the economic activities while ensuring CEBs’ yield sufficient revenue,” Ratnayake pointed out.
PUCSL demand comes a week after Power and Energy Minister Kanchana Wijesekera announced electricity tariff will have to be increased in July in line with the previously stated biannual revision to implement a cost reflective pricing mechanism.