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New formula: Electricity tariffs to change only once a year
View(s):By Damith Wickramasekara
The Energy Ministry is set to introduce an electricity tariff formula that will be revised only once a year.
The proposed formula will benefit both domestic and industrial consumers since the tariff will not change every three months as happens under the current tariff structure, a senior Energy Ministry official told the Sunday Times.
Talks between Energy Ministry and the Finance Ministry officials are ongoing to finalise the formula.
The official explained that the new pricing mechanism would take seasonal weather patterns into account when determining tariffs. “The first few months of the year are usually quite dry, while it rains heavily towards the end of the year. Under the prevailing system, electricity tariffs rise during the dry season and fall during the rainy season.”
Under the proposed system, tariffs will be revised only once at the beginning of the year. This would mean that the Ceylon Electricity Board operates at a financial loss over the first six months of the year, but this loss can be offset in the latter half of the year, the official claimed. Consumers will also benefit, as the single tariff revision allows them to plan accordingly, he added.
The official said similar formulas have been successfully adopted in other countries. He said the new formula would have comparatively less impact on the cost of living, given that the prices of many goods and services also tend to fluctuate according to electricity tariff revisions. “This way, you won’t see significant price revisions over a short period of time, as happens under the current tariff formula.”
Once finalised, the new tariff formula will be sent to the Public Utilities Commission of Sri Lanka, the power sector regulator, for approval.
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