Implementation of Electricity Tariff Methodology in Sri Lanka

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Organization of the Power Sector
Main expectations from the Sri Lanka Electricity Act 2009 as related to tariff
Corner stones in the Sri Lanka Electricity Act for Tariff Determination
Prerequisites for Tariff Determination in the legislation
Filing of Licensee Revenue Requirements
Generation Revenue Requirements
Transmission Revenue Requirements
Distribution Revenue Requirements
A summary of CEB Operational Costs

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Implementation of Electricity Tariff Methodology in Sri Lanka

  1. 1. Implementation of Tariff Methodology Bandula S. Tilakasena Ceylon Electricity Board
  2. 2. Government of Sri Lanka Ministry of Power and Energy Public Utilities Commission of Sri Lanka CEB 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
  3. 3. 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)
  4. 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
  5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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.
  9. 9. 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.
  10. 10. 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
  11. 11. 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.
  12. 12. 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%
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. Enrich Life through Power Thank You
  18. 18. 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% Kilinochchi 16% Vavuniya 75 % Trincomalee 75% Polonnaruwa 85 % Kegalle 91% Batticoloa 64% Matale 97 % Kandy 93 % Nuwaraeliya 97 % Ratnapura 86% Galle 99 % Hambantota 100% Mullaithivu 18% Anuradhapura 90 % Badulla 90% Puttalam 96 % Mannar 59% Ampara 87 % Matara 98 % Kalutara 99% Colombo 100% Gampaha 100% Jaffna 80 %
  19. 19. 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
  20. 20. Reducing System Loss Enrich Life through Power 0.0 5.0 10.0 15.0 20.0 25.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Percentage(%) December 2012: System Losses on Net Generation base = 10.42%
  21. 21. 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

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