ISSN: 1391 - 0531
Sunday March 9, 2008
Vol. 42 - No 41
Financial Times  

Not many willing to conserve power

Sri Lankan industrialists and housewives are up in arms over a decision by the Ceylon Electricity Board (CEB) to increase electricity rates which in some cases would be substantially higher than current rates.

The Sunday Times FT conducted an email poll on this issue and the following are additional comments to YES, NO and UNDECIDED responses that we got:

1) Asked whether the CEB should continue to provide subsidized electricity to the consumer: This is what some consumers had to say:
-- Yes to the poorest segment whose household income is less than Rs 10,000 per month and/or living in a sq. foot area of less than 600.
-- No… but their inefficiencies cannot be passed on.
-- We need to move away from a welfare state.
-- The subsidy should be given to low income families/educational institutions/government hospitals BUT not government offices.
-- Electricity is a luxury and not necessary for basic survival
-- If CEB inefficiencies are corrected, then we don’t need subsidies.
-- Power should be provided at rates viable for businesses to bear and in line with a well structured pricing formula. A sudden jump of 40% would be unbearable and many businesses, particularly SMEs would be rendered unprofitable. It will have national repercussions.
-- Adjust prices in two stages, six months apart and the government should obtain a long term concessionary loan to repay the debt incurred as a result of past subsidies.

2) Asked whether the CEB should sell at market rates (actual rate it costs to the CEB + administration costs), this is what consumers had to say:

-- The CEB should charge only actual costs as the cost of living is unbearable.
-- Selling at market rates is an ideal scenario but I don’t think it’s possible.
-- The power section should be open to competition and let the market forces prevail.
-- Only if there is competition and the CEB is forced to be efficient.
-- Yes, because we cannot get into debt and have future generations pay our bills to have cheap electricity today. Higher prices will force companies to seek alternative energy sources.
-- Market Rates” is a misnomer as the CEB is a monopoly. Monopolies have certain responsibilities because consumers do not have a choice. The CEB should justify its costs and show that there is no wastage and corruption that is driving its costs up. -- Yes if market rates include a profit with a free cash flow positive return but the costs should not be actual costs but the opportunity costs of running the operations at optimum efficiency.

3) In response to the question - are power costs high because of global events or is it due to mismanagement at the CEB, consumers said:

-- Political interference in CEB management is blocking coal plants.
-- Mismanagement of the CEB and consumers who still don’t have any understanding of energy conservation.
-- Gross mismanagement, political interference, unfair trade union action to safeguard unnecessary jobs and personal interests.
-- 80% is due to sheer mismanagement and corruption.
-- World market prices of fuel are at an all time high but the CEB and successive governments have done nothing to resolve the power crisis we have been facing for over 10 years. There is no competition for the CEB and therefore no incentive to provide better services
-- Shortsightedness of our politicians. They would not allow the CEB to build the necessary coal plants.
-- Urgent restructuring of the CEB is required to tackle inefficiencies and corruption. Gains would aid in offsetting the costs of the subsidy as well.
-- A combination of both and more importantly due to lack of implementing plans fearlessly. The latter is perhaps beyond CEB’s control and successive governments are to be blamed. This is a classic example of our leaders putting political feasibility ahead of the country’s interests. I remember the full page advertisements run by the CEB and signed by their then Chairman – Arjun Deraniyagala almost 10 years ago. These advertisements alerted the public of the dire consequences if the construction of the proposed Thermal Power plant was not implemented. After almost 10 years, that power plant is yet to be commissioned. I think the CEB knows what to do and how to do it. They just need to be allowed to do it… and that does not require the arduous route of privatization.

4) To the final question of whether consumers will reduce consumption if the rates increase, this is what consumers had to say:
-- Whether the prices are revised or not, as a responsible citizen I have been and will always try to conserve electricity.
-- Already curtailed and no room for more.
-- Are we supposed to live in darkness?
-- Not possible other than stay in the dark as all possible measures to reduce consumption have been taken.
-- The industrial sector will face adverse affects as we are not competitive with regional rates.
-- Switching to alternative, renewable sources such a solar power is something we need too consider seriously.
--- Consumers must adopt all measures of economy, efficiency and effectiveness
-- Replace more bulbs with energy saving bulbs.

Other related comments:
-- The government should encourage the use of solar power and make it a duty free item and promote it in Colombo. Houses can have both and people will definitely use solar and keep grind power only for refrigerators, water motors, fans, etc.

-- There is a saying that the only solution to high prices is HIGH PRICES. This will determine demand and supply, there is no such thing as a free lunch. When something is given free or subsidized, there is someone else paying for it. People should only consume what they can afford and cut down on what they cannot. The high cost due to fossil fuel related energy is consequent to politicians not making the right decisions in the last three decades, example - postponement of the Norochaolai Coal plant to accede to the will of a few in the area. National development should take precedence over rights of a few politically motivated individuals.

-- It is not the fault of the CEB but of all the political parties in power since early 1990’s. Mismanagement adds to the costs no doubt but the bigger cost element is the use of inappropriate technologies to generate power.

-- Public services and utilities should be priced based on 'needs and means'. This way you ensure a more equitable distribution - no one is excluded because they cannot afford it - at the same time those who could afford it can consume freely with no scarcity.


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