Darkness deepens for powerless CEB
By Dhanuusha Pathirana
The Ceylon Electricity Board will lose an additional Rs. 10 million a day, due to last Sunday's price hike in furnace and diesel oil, an official of the CEB Engineers Union said.

Union Secretary Noel Priyantha told the Sunday Times this was in addition to the Rs. 47 million the CEB loses a day because of the high Thermal Power rates. Mr. Priyantha said the cost of production of a unit of electricity was much higher than the selling price of a unit.

The country's total consumption of electricity is in the region of some 15 to 20 million units a day and because of the disproportionate selling price the CEB is forced to undergo a loss of three rupees for every unit sold.

The buying rate of a unit of Thermal Power is about Rs. 10.50, while the domestic selling rate is Rs. 7.70 and with the oil price hike the Electricity Board is losing an additional .50 cents for every unit sold.

Mr. Priyantha said 70% of the electricity was generated from Thermal Power and this was not a preferable source of energy for Sri Lanka since fuel– an essential ingredient for thermal power – was very costly and the prices were continuously on the rise.

"The quantity of electricity generated using thermal power worldwide is only 7% as the use of oil is not economical and its availability too is rapidly decreasing. The only option then is to use coal as a source of energy and in case of a price increase, the rate of increase is much lower than that of fuel". he said.

Mr. Priyantha said it appeared that the agreements entered into between the CEB and the thermal power generators have turned out to be highly disadvantageous to the CEB.

An agreement between the CEB and the thermal power generators states: "The tariff for the supply of electrical energy to the CEB comprises of the capacity charge and the energy charge. The above components of the tariff are based on the oil prices as of May and accordingly will vary over the term of the agreement. The tariff is based on the minimum guaranteed energy amount of 697,674,432 units".

The CEB generation planning engineer, Samitha Maligaspe said the capacity charge remained constant and basically comprises financial costs incurred in constructing power plants including loans obtained from banks and financial institutions by thermal power generators.

"The energy charge will differ according to the change in fuel prices and includes fuel costs, maintenance costs, transporting costs (this depends on diesel and petrol, the prices of which were increased by Rs. 6 and Rs. 4 recently) and the cost of machine repairs during a breakdown", he said.

Mr. Maligaspe said the CEB had to pay for the minimum guaranteed energy amount (MGEA) of 697,674,432 units, even if the consumption of electricity is lower than the MGEA and invariably the consumption was more often than not lower than the quantity for which we pay.

"The demand for electricity is growing at a rate between 8 to 10% a year. This is an extremely large quantity. So this increase must be catered to, otherwise we decelerate the commercial and industrial growth of the country and electricity breakdowns become an annoying occurrence to the domestic consumer", the CEB Engineers’ Union Secretary said.

Meanwhile Ace power generation finance manager, Samhil Mohideen said his company was compelled to increase the rate of electricity supplied to the CEB since furnace oil, diesel and petrol prices have been increased. Ace power generation thermal power plant is situated in Matara and supplies 20 MWs of electricity to the national grid.

Govt. temporarily stalls bigger price increase
The Government had authorized the Ceylon Electricity Board to increase the domestic and industrial service charge on electricity by 8%, to offset the price increase in furnace oil and the heavy losses incurred by the CEB, a top CEB official said.

He said though the CEB proposed an increase of 20% in the service charge as a means of reducing the losses, the government only agreed for an increase of 8% but discussions for a further increase were still continuing.

Right of reply: LECO GM clarifies
The Lanka Electricity Company (Private) Ltd (LECO) responding to an article in The Sunday Times of April 17 which appeared under the heading "CEB Crisis: Either way the consumer is plugged" says that the company is not given a subsidised rate or a preferential rate for its electricity purchases from the CEB.

The letter from the General Manager W.A.L.W.A. Perera said the article does not indicate the CEB's average cost of generation of a unit of electricity and the graph reproduced in the article showed only the generation costs of thermal power stations.

"Cost of generation at hydro stations are not indicated. Average cost of generation of a unit of electricity is determined by dividing the sum of cost of generation (ie. cost per unit multiplied by total units generated) at all stations supplying the system, by the sum of units generated at all the stations, for a given period of time. It appears that this information was not included deliberately to mislead the reader into believing that LECO purchases electricity below production cost", the General Manager says.

LECO states that the Company purchasing electricity at primary substations connected to 33 kV systems, is required to pay its share of costs as allocated to the CEB's generation, 220/132 kV transmission and 33 kV systems. This is lower than the CEB's average selling price of Rs. 7.68 per kWh for 2003, indicated in the graph, which is the average selling price for energy sold to all CEB customers, including sales to LECO.

The average rate paid by LECO has been in the range of Rs. 6.03 to Rs. 6.10 per kWh. This average rate arises from the maximum demand and energy rates to supply LECO, fixed by the CEB at the last tariff revision.

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