Moves to reduce Rs 33 b from CEB's 2013 cost estimates

Public Utilities Commission of Sri Lanka (PUCSL) chairman Dr Jayatissa de Costa yesterday said steps will be taken to reduce Rs 33 billion from the 2013 cost estimates filed by the Ceylon Electricity Board (CEB).

Dr Costa in a press release said the Commission has taken the expired power purchase agreements with private power producers into account in the cost estimates filed by the CEB.

The release said the commission is of the view that this energy requirement could be covered through generation capacity of existing CEB hydro power plants.

"Based on the generation recorded in January 2013, the generation capacity of hydro power plants in 2013 is expected to be much higher than previous years and therefore a saving could be achieved by the CEB in this respect," the release said. The Commission is of the view that cutting back on the above identified non essential generation expenses would result in a saving of Rs 22 billion to the CEB.

The release: "After the assessment of cost estimates filed by the Ceylon Electricity Board for 2013, the Public Utilities Commission of Sri Lanka has decided to make cutbacks to these estimates. As per CEB estimates filed with the Commission, the CEB would require Rs 268 billion to provide electricity to consumers in 2013. The commission after an in depth analysis of these estimates, identified the prudent cost that to be recovered through electricity tariffs. The commission also assessed whether these cost estimates filed by the CEB were prepared according to the approved methodology. "Upon completion of these assessment, the Commission decided to cut back on approximately Rs 33 billion of these filed expenses due to these costs being identified as non essential expenses. Therefore the reassessment of these expenses and cutting back of non essential expenses by the Commission will result in this cost component not being passed on to the consumers through electricity tariff by the CEB.

"Further, it will also reduce expenses incurred by the government as subsidies towards the CEB. If a revision to the present electricity tariff is required by the CEB, these proposed rates should reflect the cut backs suggested by the Commission. Any revision to the present tariff would also require commission approval. The following were identified by the Commission as non - essential expenses of the CEB. In cost estimate filed by the CEB, expired power purchase agreements with private power producers were also taken into account. The commission is of the view that this energy requirement could be covered through generation capacity of existing CEB hydro power plants. "Based on the generation recorded in January 2013, the generation capacity of hydro power plants in 2013 is expected to be much higher than previous years and therefore a saving could be achieved by the CEB in this aspect.

"The commission is of the view that cutting back on the above identified non essential generation expenses would result in a saving of Rs 22 billion to the CEB.

Further, through cutting back on non - essential capital expenditure, the CEB could reduce Rs 5 billion. In addition, around Rs 6 billion in expenses identified as not relevant to supply of electricity could also be reduced from CEB estimates.

"After reassessment of their expenses based on commission recommendations, the CEB may submit their tariff proposals based on revised expenditure to the commission. Any revisions to the present electricity tariff should follow the below mentioned procedure. Cost estimates filed by the CEB and proposed tariff revisions will be subject to a process of stakeholder consultation. Public views as well as government policy will be considered before any approval of cost estimates filed by CEB or any revisions to the current electricity tariff.

"The Commission shall take steps to ensure that the public and electricity industry stakeholders are kept informed on the above mentioned procedures at all times."