A fair deal for electricity consumers

Damitha Kumarasinghe Deputy Director General, Public Utilities Commission of Sri Lanka

Over the past few decades many countries around the world have transformed their electricity industries in order to achieve economic efficiency and social objectives. One of the main such changes is the establishment of regulatory institutions to regulate the industry.

Sri Lanka too has moved in that direction and today observes World Consumer Rights Day, recognizing the importance of promoting the basic rights of all consumers, demanding that those rights are respected and protected, and ensuring the market is free of abuse and social injustices which undermine these rights.

World Consumer Rights Day was first observed on 15 March 1983, and has since become an important occasion for mobilising citizen action.

Consumers at a busy market

Keeping in line with international best practices, the Government of Sri Lanka enacted the Sri Lanka Electricity Act No 20 of 2009. The purpose of this Act is to provide for the regulation of generation, transmission, distribution, supply and use of electricity in the country. This Act empowered the Public Utilities Commission of Sri Lanka (PUCSL) with regulatory responsibilities in the electricity sector.

This new electricity regulatory regime is intended to provide benefits to all stakeholders of the sector which include but not limited to the Ceylon Electricity Board (CEB), Lanka Electricity Company (LECO), other private generators, village electricity schemes, the government, and most importantly all consumers and prospective consumers.

This article, commemorating World Consumer Rights Day, examines the benefits of the new electricity regulatory regime for two of the most important stakeholder groups; the existing consumers of electricity and the prospective consumers of electricity.

The Public Utilities Commission of Sri Lanka (PUCSL)

The PUCSL is a government institution established by an Act of Parliament, consisting of five commissioners with at least one member each having qualifications and experience in the professions of engineering, law, and business management.

It employs a small staff comprising of mainly well-trained professionals in the disciplines of engineering, economics, finance, law, and business management.

Some of main objectives of the PUCSL (as per the PUCSL Act) related to the electricity industry include:

1. Protecting the interests of consumers

2. Promoting efficiency in both the operations and capital investments

3. Promoting efficient allocation of resources

4. Promoting safety and service quality

5. Benchmarking against internationals standards

6. Ensuring that price controlled entities acting efficiently do not find it unduly difficult in financing their activities

Therefore, it is mandatory for PUCSL to safeguard the interests of all stakeholders, not only the price controlled utilities such as CEB and LECO, but also the marginalised electricity consumers.

Electricity Consumer Expectations

Electricity consumers have many expectations which mainly focus on fair pricing of electricity.

Amongst other issues are supply quality and reliability, access to electricity, issues pertaining to socio-economic groups, rights of the consumers and dispute resolution.

Above all, they expect some authority to listen to their concerns and understand the issues at hand. Let's examine how the PUCSL Acts to protect the interests of electricity consumers.

a) Fair Pricing

Prices should be fair for the both the consumers as well as the service providers. This means that price regulation is intended to restrict economically unjustifiable profits to the investors but still provide them with a reasonable return on their investments.

The PUCSL is legally directed by the Sri Lanka Electricity Act to follow the cost reflective pricing policy guidelines approved by the Cabinet of Ministers. Cost reflective implies that only the cost of efficient operations will be taken into account in determining the tariff.

Furthermore, examining the objectives of the Commission under the PUCSL Act, the Commission shall:

1. Protect the interest of all consumers

2. Ensure that price controlled entities acting efficiently do not find it unduly difficult in financing their public utility industries

b) Quality and

Reliability

Quality and reliability of electricity supplied should comply with supply and performance standards regulations.

Some examples of performance standards are, time taken in restoring supplies after a fault, connecting a new premises to the grid, time taken to respond to customer complaints, etc. whereas supply standards consist of voltage, frequency etc. The PUCSL should make these standards publicly available and all consumers must be educated in this regard.

It is expected that over a period of time these supply and performance standards will be improved resulting in high quality and reliable electricity supply to all. Therefore, these new legal requirements will be highly beneficial for electricity consumers in terms of the quality and reliability of their electricity supply in the long-term.

c) Requirements of Different Socio-Economic Groups

This is a very important aspect in our society. Until the Sri Lanka Electricity Act came into effect, there was no legal requirement to consider concerns of different socio-economic groups. This includes low-income support for the use of electricity. The Act clearly indicates that the Cabinet of Ministers should formulate policy guidelines considering the requirements of different socio-economic groups, thus ensuring equal attention to all socio-economic groups in Sri Lanka. These policy guidelines will be implemented through the PUCSL. These guidelines will be published and, as an advisor to the Government on policy, the PUCSL needs to provide the information gathered through public consultations and the Consumer Consultative Committee (discussed later) to the Cabinet of Ministers in order to draw up policy guidelines.

To be continued