Implementation

of

Tariff

Methodology

Bandula S. Tilakasena

Ceylon Electricity Board

Government of Sri Lanka

Ministry of Power and Energy

Public Utilities Commission

of

Sri LankaCEB Generation

Licence GL

Consumers

CEB Disribution

Small Power Producers

Independent Power Producers

Lanka Electricity Company PVT Ltd.

DL5

CEB Disribution

CEB Disribution

Licence DL 2

CEB Disribution

CEB Transmission

Licence TL

Licence DL 1

Licence DL 4

Licence DL 3

Licensing

Licensing

GOSL Policy

Directions

Organization of

the Power Sector

Main expectations from the Sri Lanka

Electricity Act 2009 as related to tariff

• Cost-reflective Tariffs & Charges (s. 30)

• Licensees being able to finance the

licensed activities (s. 4)

Corner stones in the Sri Lanka Electricity Act

for Tariff Determination

• Cost Reflective Methodology

Permit relevant licensees to recover all

reasonable costs incurred in carrying out

the authorized activities

• To be in accordance with Government

Policy Guidelines under Section 5

Prerequisites for Tariff Determination in the

legislation

• PUCSL Act : Section 30 (2)(a)

Government compensates Licensees for compliance

with GOSL Policy Directions

• Section 30 (4) of SLEA and S 30(2)(b) of PUCSL

Act

Upon being satisfied of adequacy of funds being

provided by the Treasury to bear the cost of any subsidy

approved by the Government to subsidize Costumers…

• Cross subsidies are recoverable from Customer

categories

Filing of Licensee Revenue Requirements

All Licensees submitted their Revenue

Requirements in August 2010 for the First Tariff

Period.

An Extraordinary Tariff Filing was allowed for

August 2011

Generation Revenue Requirements

• The Transmission Licensee (TL) submitted its

Revenue Requirements on account of

generation costs in a prescribed format for each

power plant, on the basis of the forecast

dispatch schedule.

• The costs of generation are on the basis of

Agreed Values of the respective PPA’s

Transmission Revenue Requirements

• The Transmission Licensee (TL) submitted their

Revenue Requirements for the Transmission

Business and Bulk Supply and Operation

Business (BSOB) as well in August 2010.

• There was no prescribed format, but the TL

submitted this in great detail, up to the level of

respective cost codes of each cost center.

Distribution Revenue Requirements

• The Distribution Licensees (TL) also submitted

their Revenue Requirements for the Distribution

and Retail Supply Businesses in August 2010.

• There was no prescribed format, but the DL too

submitted this in detail, up to the level of

respective cost codes of each cost center.

Decision Document 2011

• The Tariff Decision for the First tariff Period was

announced in January 2011, after following the

statutory requirements

• The Licensees made the Extraordinary Filing as

on the due time

• No decision was announced for the

Extraordinary Filing

Actual Costs

• All Licensees submit their Actual Costs in

December and June each year

• In addition, Transmission Licensee (TL) submits

its forecast Revenue Requirements on account

of generation costs in a prescribed electronic

format for each power plant, on the basis of the

forecast dispatch schedule.

A summary of CEB Operational Costs

Enrich Life through Power

Generation Cost 80%

Personnel 6.1%

Materials 1.7%

Accommodation 0.4%

Transport & Communication

1.0%

Other costs 1.2%

Finance cost 1.4%

Depreciation 11%

Adjustments to Revenue Requirements

• Adjustments are made to the base allowed

revenues for TL and DL on the basis of SLCPI and

US$

• Bi-annual (BST) compensation to DL and TL are

being made on the basis of actual costs.

• No annual end-user tariff adjustment took place

according to Clause 3.1.4 of the Tariff

Methodology

Uniform National Tariff

• UNT is calculated by PUCSL on the basis of

approved Revenue Requirements of the

Licensees

• Difference between the Approved Revenues and

Revenues generated through UNT are

compensated, albeit some concerns of the

Licensees

Government Policy Directions

Many Regulatory Decisions are taking cover under

GOSL Policy Directions.

However, other than the broad policy as approved

in 2009, none of these “Policy Directions” strictly

fulfilled the statutory requirements of Section 5 of the SLEA

Bulk Supply Transaction Account

The Licensee has established the Bulk Supply

Transaction Account with approval of the PUCSL

to record the transactions

This depicts the transactions taking place between

the Licensee on actual basis, and submitted to

PUCSL bi-annually

Enrich Life through Power

Thank

You

Enhanced accessibility

all over Sri Lanka…

Electrification Level in

December 2012

Target :

Electrification by end 2013

Enrich Life through Power

93%

100%

60-80% 80-97%

<60%

>97%

Kurunegala

91 %

Moneragala

76%

Kilinochchi16%

Vavuniya

75 %

Trincomalee

75%

Polonnaruwa

85 %

Kegalle

91%

Batticoloa64%

Matale

97 %

Kandy

93 %

Nuwaraeliya

97 %

Ratnapura

86%

Galle

99 %Hambantota

100%

Mullaithivu 18%

Anuradhapura

90 %

Badulla90%

Puttalam

96 %

Mannar59%

Ampara

87 %

Matara

98 %

Kalutara

99%

Colombo100%

Gampaha100%

Jaffna 80 %

CEB owns and operates

the entire transmission

network that operates at

220 kV and 132 kV

Transmission

2010 2011 2012

220 kV 483 km 483 km 501 km

132 kV 1,755 km 1,774 km 1,840 km

Grid

Substations 55 57 58

Reducing System Loss

Enrich Life through Power

0.0

5.0

10.0

15.0

20.0

25.0

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Pe

rce

nta

ge (

%)

December 2012:

System Losses on Net Generation base = 10.42%

Projected Loss

From 2011 and beyond 2013…

Enrich Life through Power

Year Loss

Rs Billion

2011 19.27

2012 61.16

2013 43.78

2014 23.27

2015 3.5

2016 (1.4)

Main Assumptions for 2013-2016

• No tariff increase after 2013

• Debt Service commences in 2014

• Nominal price escalation of Oil = 5%

• Price escalation for coal = 5%

• No price escalation for NCRE

• Puttalam Coal Phase 2 (600 MW)

available in October 2013 - April 2014

• Hydro inflow at 63% dry