Power generation cost down, tariff could be reduced - Expert

By Ifham Nizam

The average unit cost of electricity, both in generation and supply, has come down drastically, an internal analysis by the power sector’s regulator, the Public Utilities Commission of Sri Lanka (PUCSL), reveals.

The rates rose to Rs. 15.54 (average generation unit cost) and Rs. 21.31 (average supply unit cost) in April this year, prompting the Ceylon Electricity Board (CEB) to push for a power tariff hike. However, the average unit cost for generation has come down to Rs. 8.04 and the supply cost to Rs. 12.84 in June.

A CEB official said: "Since January this year, monthly generation mix has been dominated by hydro. This is a very positive trend when compared with the past two years. PUCSL will now be in a position to bring down the electricity prices in November using the six-month methodology."

With reservoirs having sufficient hydro capacity, more than 70 per cent of the country’s electricity was now produced from hydro and the CEB was saving some five billion rupees monthly, which was earlier spent on costly thermal power, senior engineers said.

The Island learns that the government could now easily do away with the Fuel Adjustment Charge (FAC). Going by the PUCSL methodology, if the CEB benefits from cheaper hydro power, the benefit should be passed down to the consumers.

"The forthcoming revision has to be downward when considering the hydro capacity and lesser use of thermal energy," a CEB official said. Currently, FAC accounts for between 25 and 40 per cent of an electricity bill.

The CEB could manage the country’s energy need with Rs. 200 billion as against the earlier projected cost of Rs. 256 billion.

The PUCSL will come out with its recommendations shortly. It was the PUCSL that said the CEB could manage with Rs. 228 billion, when it budgeted a requirement of Rs. 256 billion, early this year.

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