Economic Impacts of Economic Impacts of Energy PricesEnergy Prices

SLEA Annual SessionsSLEA Annual Sessions

1

SLEA Annual SessionsSLEA Annual Sessions

Tilak SiyambalapitiyaTilak Siyambalapitiya

15 Oct 201115 Oct 2011

News, not really news, or should not be news....

Ceylon electricity Board is incurring heavy Ceylon electricity Board is incurring heavy losses due to burning more fuel for power losses due to burning more fuel for power

generation, CEB sources say. (2011)generation, CEB sources say. (2011)

Petroleum Corporation to post losses: Petroleum Corporation to post losses:

2

Petroleum Corporation to post losses: Petroleum Corporation to post losses: subsidised fuel supply for power generation subsidised fuel supply for power generation

and kerosene subsidy, the reasons (2010)and kerosene subsidy, the reasons (2010)

Ceramic industry in trouble: Ceramic industry in trouble: energy costs unbearable, says energy costs unbearable, says Ceramic Council (all the time)Ceramic Council (all the time)

� Sri Lanka has the highest price of electricity in the region !� Fact or fiction ?

� Petroleum prices never match costs, but we need subsidies.

The Public Say .......

3

need subsidies.�When will this end ?

� Build renewable energy-based power generation !�Willing to pay for them: No

�Willing to have one in your back yard: No

� Energy intensity of the economy and its trend

�What can be done to retain the healthy trend ?

� Energy costs of individual companies/processes.

Presentation Outline

4

companies/processes.

�Which way should we move ?

� The new electricity pricing policy

�How will it resolve the sub-sector burden on the Treasury

� Can we replicate it in the petroleum sub-sector?

Coal

0.5%

Hydro

9.5%

Biomass

47.7%

Sri Lanka Primary Energy Supply: 2007

5

Petroleum

42.3%

Total primary energy supply: 10 million toePer capita supply: 0.5 toeShare of renewable energy 57.2%

Sri Lanka Electricity Prices Compared

Ba

ng

lad

esh

Ke

rala

,

Ind

ia

Ma

ha

rash

tr

a,

Ind

ia

Ta

mil

na

du

,

Ind

ia

Ma

lay

sia

Ne

pa

l

Pa

kis

tan

Ph

ilip

pin

es

Sin

ga

po

re

So

uth

Ko

rea

Sri

La

nk

a

Th

ail

an

d

Small 30 - 5.31 2.82 1.87 2.78 8.00 7.80 3.26 11.92 21.09 8.46 5.00 5.58

Medium 90 - 4.58 3.98 6.59 4.61 8.00 10.05 5.68 14.54 21.09 7.77 6.07 7.04

Large 300 - 4.94 7.53 9.12 7.32 9.41 11.50 7.63 18.31 21.09 12.92 23.87 8.79

Average Unit Price in LKR (unity power factor)

Household

Customer Class

Electricity

Usage

(kWh/mth)

Maximum

Demand

(kW)

6

Small 1,000 - 5.33 21.23 14.02 15.73 14.56 13.85 17.32 26.44 21.09 10.52 19.74 10.11

Medium 58,000 180 8.82 15.03 21.02 16.52 13.29 12.66 12.01 18.93 21.09 9.44 22.09 8.76

Large 600,000 1500 6.67 11.23 18.47 16.08 12.76 12.15 10.68 16.95 14.60 7.67 20.98 8.75

Small 5,000 - 6.81 8.11 11.95 12.04 12.77 10.27 11.60 16.33 21.09 5.74 10.55 10.65

Medium 65,000 180 4.12 9.20 12.31 11.86 12.13 9.83 10.72 18.37 20.95 6.50 12.47 8.49

Large 270,000 600 7.71 8.84 13.21 11.45 9.39 9.47 10.18 16.61 20.49 6.51 11.55 8.46

Very Large 1,050,000 2250 5.25 8.49 13.18 11.40 8.84 7.61 9.72 16.36 14.09 6.35 11.48 8.38

Commercial

Industrial

� Energy: Per capita total energy consumption (including biomass):

� 0.4 tonne of oil equivalent per person per year

� Electricity

Total electricity consumption: 460 kWh/person/year

Sri Lanka: Status of Energy Services

7

� Total electricity consumption: 460 kWh/person/year

� About 90% of households have an active grid electricity connection, 3% off-grid services

� Ambitious target to serve the balance 7% by end 2012

� Demand fully served, pricing problems remain

� Petroleum

�Demand served, pricing problems remain

Energy Demand is Growing and will Energy Demand is Growing and will continuecontinue

Supply of Energy by Different Sources (Thousand TOE)

6,000

8,000

10,000

12,000

Th

ou

sa

nd

TO

E

Biomass (Thousand TOE) Petroleum (Thousand TOE)

Hydro (Thousand TOE) Non-conventional (Thousand TOE)

8Source: Sri Lanka Energy Balance 2007

0

2,000

4,000

6,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Year

Th

ou

sa

nd

TO

E

Energy Intensity of the Economy: Primary Energy

9

Energy Intensity of the Economy: Commercial Energy

10

� Reasons ?

� Structural change in the economy: Services need less energy than manufacturing

� High energy prices keep consumption low, discourages waste

� Other indicators are not that healthy !

Macro Picture of Energy Use and trend : Good

11

� However ........ severe problems in end-use sectors

� Transport: excessive waste

� Heavy industry: no longer competitive

� Electricity use in households growing, industry: low growth, problems to supply

� Severe issues in energy utilities

Energy Imports

108.5

60

80

100

120

140

Share of export income

used to import oil

Average import price of

crude oil (USD/bbl)

12

20.7

37.8

44.8

0

20

40

60

19

72

19

75

19

78

19

81

19

84

19

87

19

90

19

93

19

96

19

99

20

02

20

05

20

07

� Transport sector�Many solutions proposed by economists, specialists. Effectively NONE have been implemented.

�Highlight one proposal: Electrification of suburban railways� Project can be justified on energy savings alone

What are the Solutions ?

13

� Project can be justified on energy savings alone

� Many professional proposals for the past 30 years, most-recently by the Institution of Engineers

� No where near implementation

� Manufacturing industry� Some indicators show growing specific energy consumption

� Needs more focus on energy efficiency� Beyond switching off ...... process changes

Problems of Sector InstitutionsProblems of Sector Institutions

The Case of the Power SectorThe Case of the Power Sector

14

Sri Lanka’s 2006 Policy in Action: Energy Share in Electricity

10,000

12,000

14,000

16,000

18,000N

et

Gen

era

tio

n (

GW

h)

Coal

Oil

Non-conventional renewable

Hydro

15

-

2,000

4,000

6,000

8,000

2010 2011 2012 2013 2014 2015

Net

Gen

era

tio

n (

GW

h)

� A unique window of opportunity

� Must be used to

�Restructure prices

�Get the sector back into profitability

� Any indications of that happening ?

Changing fuel mix in Power Generation

16

� Any indications of that happening ?

�Methodology established

�Implementation: sluggish !

Sri Lanka’s Window of Opportunity�� Electricity production costs are declining in real Electricity production costs are declining in real termsterms

�� The three key power plants must be built on timeThe three key power plants must be built on time

�� IPPs are retiring, capacity payments will decline (not to IPPs are retiring, capacity payments will decline (not to forget the Govt is paying loans, which CEB is not servicing forget the Govt is paying loans, which CEB is not servicing until end 2013) [see picture next slide]until end 2013) [see picture next slide]

�� Better use of network assetsBetter use of network assets

17

Better use of network assetsBetter use of network assets

�� Network losses are declining Network losses are declining [see table in a later slide][see table in a later slide]

�� Good oversight by PUCSL and determined effort by licensees Good oversight by PUCSL and determined effort by licensees would be requiredwould be required

�� Expected high economic growthExpected high economic growth

�� A new regulatory system in placeA new regulatory system in place

The Evolving Cost Structure

0.45

0.790.85

0.96

1.12

1.06

2.712.88

2.67

2.49

2.30

2.12

10.00

12.00

14.00

16.00

18.00

20.00

Avera

ge c

ost

of

sa

les t

o e

nd

-use

rs (

Rs/k

Wh

)

Distribution

Transmission

Generation Fuel

Generation capacity

In constant 2010 currency-no

inflation or fuel price

escalations

18

3.204.03 4.01 4.53 4.65 4.62

10.54 8.64 9.159.49

7.04

5.59

-

2.00

4.00

6.00

8.00

10.00

2010 2011 2012 2013 2014 2015

Avera

ge c

ost

of

sa

les t

o e

nd

-use

rs (

Rs/k

Wh

)

The Declining Losses to be Managed by Licensees and the Regulator

Year Sales to End-use

Customers (GWh)

Sales growth

Input to Transmission

network (GWh)

Sri Lanka T&D Loss

(% of input to transmission)

Policy target for

Sri Lanka T&D losses

2009 8,371 - 9,754 14.2% 13.5%

2010 9,031 7.9% 10,503 14.0%

19

2010 9,031 7.9% 10,503 14.0%

2011 9,667 7.0% 11,185 13.6% 2012 10,308 6.6% 11,903 13.4% 2013 10,989 6.6% 12,612 12.9%

2014 11,713 6.6% 13,375 12.4% 2015 12,485 6.6% 14,206 12.1% 12.1%

2016 12.0%

Transition to a Regulated Market�� Generators (IPPs, SPPs, CEB)Generators (IPPs, SPPs, CEB)

�� Sell only to Transmission LicenseeSell only to Transmission Licensee

�� Based on Power Purchase Agreements (PPAs), no competitive marketBased on Power Purchase Agreements (PPAs), no competitive market

�� Existing PPAs will continue, new PPAs only based on approved plan and Existing PPAs will continue, new PPAs only based on approved plan and

competitive biddingcompetitive bidding

�� Transmission Licensee (one)Transmission Licensee (one)

�� Transmission (Wires) businessTransmission (Wires) business

�� Operates the Transmission System, including the dispatchOperates the Transmission System, including the dispatch

�� Bulk Supply business: Buys from Generation, sells to distribution [no Bulk Supply business: Buys from Generation, sells to distribution [no

20

�� Bulk Supply business: Buys from Generation, sells to distribution [no Bulk Supply business: Buys from Generation, sells to distribution [no

profit/loss]profit/loss]

�� Distribution Licensees (five)Distribution Licensees (five)•• CEB Region 1CEB Region 1

•• CEB Region 2CEB Region 2

•• CEB Region 3CEB Region 3

•• CEB Region 4CEB Region 4

•• Lanka Electricity Company (Pvt) Ltd.Lanka Electricity Company (Pvt) Ltd.

�� Distribution (wires) BusinessDistribution (wires) Business

�� Retail services (metering, meter reading, accounting, collections)Retail services (metering, meter reading, accounting, collections)

�� Retail Business: Buys from transmission, sells to endRetail Business: Buys from transmission, sells to end--use customers [no use customers [no

profit/loss]profit/loss]

The New Tariff Policy�� All licensee financial operations are “ringAll licensee financial operations are “ring--fenced”fenced”

�� Licensees are responsible only for matters under their controlLicensees are responsible only for matters under their control

•• Rewarded for exceeding target (eg: greater reduction of network Rewarded for exceeding target (eg: greater reduction of network losses)losses)

•• Penalised for under performance (eg: increasing losses)Penalised for under performance (eg: increasing losses)

�� For parameters not within their control, they are transparently For parameters not within their control, they are transparently compensated (surcharged)compensated (surcharged)

•• Government wants more subsidies to be given (compensated), and Government wants more subsidies to be given (compensated), and if the Government does not pay ?: surcharge the relevant if the Government does not pay ?: surcharge the relevant customerscustomers

21

customerscustomers

•• The Single Buyer hits a drought (compensated, customers The Single Buyer hits a drought (compensated, customers surcharged)surcharged)

•• It rains heavily (surcharged, benefit passed on to customers)It rains heavily (surcharged, benefit passed on to customers)

�� The long and painful history of underThe long and painful history of under--pricing pricing electricity in Sri Lanka would soon come to an end, electricity in Sri Lanka would soon come to an end, under the new policyunder the new policy

�� The naming and blaming game should also endThe naming and blaming game should also end

�� All costs and prices, licensee performance, Government All costs and prices, licensee performance, Government performance, are to be publishedperformance, are to be published

�� Clear separation of business would occurClear separation of business would occur

Generation Costs�� Generation costs would be on a sixGeneration costs would be on a six--month averagemonth average

�� Transfers from Generation to Transmission would be on a twoTransfers from Generation to Transmission would be on a two--part tariff:part tariff:

�� Capacity charge: 966 LKR/MW per month (per MW of measured Capacity charge: 966 LKR/MW per month (per MW of measured demand, coincident with the system peak)demand, coincident with the system peak)

�� Pure Energy Charge: Pure Energy Charge:

Total Energy cost

for six-monthsLKR million 38,506.8

22

for six-monthsLKR million 38,506.8

Total energy

dispatch for six-

months

GWh 5,514.7

Six-month average

energy costLKR/kWh 6.98

Transmission Tariffs for Sales to Distribution

�� Generation costs and Transmission Costs are added Generation costs and Transmission Costs are added

�� Transfers from Transmission to Distribution too would be on a twoTransfers from Transmission to Distribution too would be on a two--part part tariff:tariff:

�� Capacity charge: 1243 LKR/MW per month (per MW of measured Capacity charge: 1243 LKR/MW per month (per MW of measured demand, coincident with the system peak)demand, coincident with the system peak)

�� Energy Charge: Energy Charge:

Economic

dispatch

ST debt

recovery

Renewable

energy above

avoided costs

Total BST

(E)

23

dispatch recoveryavoided costs

(E)

BST day (E1)

6-Month weighed

average

LKR/kWh 7.16 0.52 0.11 7.78

BST peak (E2)

6-Month weighed

average

LKR/kWh 9.37 0.52 0.11 10.00

BST off-peak (E3)

6-Month weighed

average

LKR/kWh 4.97 0.52 0.11 5.60

End-use Customer Tariffs: Costs and IncomeTotal Summary -2011 - With existing tariffs

Customer Category Total Sales

(GWh)

Total Cost

(LKR million)

Total revenue

(LKR million)

Total

(Subsidy) or

surcharge

on

customers

(LKR million)

Cost of

supply(LKR/kW

h)

Forecast

revenue

(LKR/kWh)

HH 1-phase

0-30 233 5,518 1,113 (4,405) 23.66 4.77

31-60 756 15,928 3,695 (12,233) 21.07 4.89

61-90 1,018 20,093 5,974 (14,119) 19.73 5.87 91-180 1,254 22,225 14,973 (7,252) 17.72 11.94

181-600 492 8,346 9,957 1,611 16.98 20.26

>600 100 1,479 3,561 2,082 14.87 35.78

Sub Total 3,853 73,590 39,273 (34,317) 19.10 10.19

Other LV

24

Other LV

Religious 57 1,004 513 (491) 17.65 9.02

General Purpose 1 1,149 15,809 23,943 8,134 13.76 20.83

Industrial 1 238 3,171 2,611 (561) 13.32 10.96

Hotel 1 1 19 20 1 15.01 15.73 Street Lighting 148 2,292 3,668 1,376 15.43 24.70

Sub Total 1,594 22,295 30,754 8,460 13.99 19.29

LV BULK -

General Purpose 2 875 9,751 18,555 8,803 11.14 21.20

Industrial 2 1,561 19,899 19,444 (455) 12.75 12.46

Industrial 2 TOU 174 2,159 2,343 184 12.41 13.47

Hotels 2 TOU 2 26 30 4 11.10 12.60

Hotels 2 (GP) 73 824 1,169 345 11.21 15.91 Hotels 2 (IP) 54 656 625 (31) 12.25 11.67

Sub Total 2,739 33,315 42,165 8,850 12.16 15.39

MEDIUM VOLTAGE -

General Purpose 3 223 2,263 4,378 2,115 10.13 19.61

Industrial 3 1,035 10,965 11,661 697 10.59 11.26

Industrial 3 TOU 143 1,376 1,721 345 9.64 12.06

Hotels 3 8 77 83 6 9.66 10.44 Hotel TOU 71 629 725 95 8.89 10.24

Sub Total 1,480 15,310 18,569 3,259 10.34 12.55

Total 9,666 144,510 130,761 (13,749) 14.95 13.53

Features of Customer Tariffs in 2010�� Not in alignment with the principles of pricing: Electricity Not in alignment with the principles of pricing: Electricity

costs are determined bycosts are determined by

�� Voltage at purchase point Voltage at purchase point

•• Determine capacity charge and average energy chargeDetermine capacity charge and average energy charge

•• Time of use determines the energy charge variantsTime of use determines the energy charge variants

�� A total of 27 customer categories (including six household A total of 27 customer categories (including six household blocks, five religious blocks)blocks, five religious blocks)

�� Customers subsidisedCustomers subsidised

�� Households using up to 180 kWh/monthHouseholds using up to 180 kWh/month

�� All religious customersAll religious customers

25

�� All religious customersAll religious customers

�� Small and medium industriesSmall and medium industries

�� Hotels classified as industriesHotels classified as industries

�� All other customers pay a surchargeAll other customers pay a surcharge

�� In addition, the Government provided an indirect subsidy byIn addition, the Government provided an indirect subsidy by

�� under pricing fuelunder pricing fuel

�� selective duty waivers for importsselective duty waivers for imports

�� various other concessionsvarious other concessions

Proposed Structural Changes to the Customer Tariff: The Road Map to Make Customers Pay what it costs

Year Households Religious Other retail

(industry, general,

hotel)

Industry

(bulk)

Hotel (bulk) General

(bulk)

Reduce blocks from 6 to 4

For 0-30 kWh

customers, Govt fully

implements a direct

subsidy, as provided in

the National Energy

Policy and the Govt’s 10-

year plan2013 Reduce blocks from 4 to 3 No No difference between the customer classes, except in

TOU

mandatory

All hotel

customers unified

into one category

No

changes

2012 No

changes

Further reduce the

price gap between

the three classes

of customer

All three classes of bulk customers to

be unified and Time of Use (TOU)

tariffs to be mandatory, Introduce a

charge for reactive power

2011 No major changes No

changes

Reduce the gap

between the three

classes

26

2014 Retain 3 blocks No

changesOptional TOU tariff for all 3-

phase customers

No

changes

2015 Abolish block tariffs.

Optional TOU tariffs to all

customers.

No

changes

No further changes

Tariffs yield adequate revenue to breakeven, meet all commitments including debt

service, but excluding a return on assets to GOSLNo further changes

Tariffs to all customers are targeted to be fully cost reflective. GOSL earns a return on

assets on the sector.

2013 Reduce blocks from 4 to 3 No

changes

No difference between the customer classes, except in

terms of voltage at which service is provided. For the

purpose of retaining a database, customer classification will

be retained in the accounting system.

TOU tariffs will be mandatory for all retail and bulk

customers in industry, hotel and general purpose categories

Any subsidies will be addressed outside the licensee tariffs.

Proposed Structural Changes to the Customer Tariff: The Ultimate Target Structure

Demand

Charge

Fixed Charge

(LKR/kVA.

month)

(LKR/month)

Households All day 15.00 - - 100

Day 15.00

Peak 18.00

off-peak 12.00

Other retail - - 100

Customers Energy charge

(LKR/kWh)

Reactive

power

Charge

(LKR/kVArh)

27

off-peak 12.00

Day 10.00

Peak 13.00

off-peak 7.00

Day 9.00

Peak 12.00

off-peak 8.00

MV Bulk 1200 0.4 2000

LV Bulk 1500 0.5 1000

Tariff figures are only for illustration

Customer Tariff Announced for January-June 2011

�� The reform process has begunThe reform process has begun

�� Customer categories down from 27 to 20Customer categories down from 27 to 20

�� Medium and large hotels unified into one categoryMedium and large hotels unified into one category

�� Time of Use Tariffs mandatory for all Time of Use Tariffs mandatory for all

•• medium and large industriesmedium and large industries

28

•• medium and large industriesmedium and large industries

•• medium and large hotelsmedium and large hotels

�� Household blocks have been retained at 6, although the Household blocks have been retained at 6, although the Govt policy may have caused blocks to be increasedGovt policy may have caused blocks to be increased

�� Street lighting costs have been “socialised’ (all customers Street lighting costs have been “socialised’ (all customers jointly pay for street lighting, estimated to be a load of jointly pay for street lighting, estimated to be a load of about 0.25 LKR/kWh)about 0.25 LKR/kWh)

�� More reforms have been planned in the More reforms have been planned in the upcoming revision datesupcoming revision dates

�� 11stst January 2012, etc.January 2012, etc.

Customer Tariff Announced for January-June 2011: The TariffsCustomer

Category and

consumption

per month

Energy

Charge

(Rs/kWh)

Fixed

Charge

(Rs/month)

Maximum

Demand

Charge

per month

(Rs/kVA)

Customer

Category and

consumption

per month

Energy

Charge

(Rs/kWh)

Fixed

Charge

(Rs/month)

Maximum

Demand

Charge per

month

(Rs/kVA)

0-30 3.00 30.00 - I-1 10.50 240.00 -

31-60 4.70 60.00 - I-2

61-90 7.50 90.00 - Day 10.45

91-120 21.00 315.00 - Peak 13.60

121-180 24.00 315.00 - Off-peak 7.35 >180 36.00 315.00 - I-3

Day 10.25

Peak 13.40

0-30 1.90 30.00 - Off-peak 7.15

Religious (R)

850.00

3,000.00 750.00

3,000.00

Industry (I)Domestic (D)

29

0-30 1.90 30.00 - Off-peak 7.15

31-90 2.80 60.00 - Hotel (H)

91-120 6.75 180.00 - H-1 19.50 240.00 -

121-180 7.50 180.00 - H-2

>180 9.40 240.00 - Day 13.00

Peak 16.90

Off-peak 9.10

H-3

Day 12.60

Peak 16.40

Off-peak 8.85

GP -1 19.50 240.00 -

GP -2 19.40 3,000.00 850.00

GP -3 19.10 3,000.00 750.00

3,000.00 750.00

General Purpose (GP)

3,000.00 850.00

Indicative Revenue Management Mechanism

Single BuyerBulk Supply Transactions

Account

Generators(CEB, IPP,SPP)Shot-term

debt repayment

Ren Energy above avoided

GOSL Subsidy

11,767 million LKR

5,600 million LKR

1,132 TL

72317,231

104,635 million LKR

30

Accountabove avoided costs

1,132 million LKR

DL16,864

million LKR

DL27,782

million LKR

DL34,563

million LKR

DL43,698

million LKR

DL52,514

million LKR

7231million LKR

7,231million LKR

34,280million LKR

27,368million LKR

17,427million LKR

11,785million LKR

15,971million LKR

41,444million LKR

35,150 million LKR

21,991million LKR

15,482million LKR

18,485million LKR

106,831million LKR

Renewable Energy:Best in the World, but world’s highest

Feed-in tariffs !!!

Sri

Lan

ka

Th

aila

nd

Uga

nd

a

Ma

laysia

Sou

th K

ore

a

Ta

nzan

ia

Ind

ia (

An

dh

ara

Pra

de

sh

)

Ind

ia (

Tam

ilna

du

)

Ind

ia (

Ka

rna

taka

)

Ind

ia (

Ma

dh

ya

pra

de

sh)

US

A (

Min

ne

so

ta

sta

te)

Gre

at

Bri

tain

(Eng

land

+S

co

tla

nd

+

Wa

les)

Can

ad

a (

Onta

rio

pro

vin

ce)

Germ

an

y

Ch

ina

(T

aiw

an

)

Mini-hydro 13.32 5.11 8.06 8.39 4.87 6.65 6.79 7.16 5.56 11.04 7.01 11.03 12.18 8.21

Wind 19.97 18.24 13.69 7.11 8.33 6.67 8.40 8.98 11.59 7.01 16.33 17.94 9.84

Renewable Energy Feed-in Tariffs paid in Different Countries (in equivalent LKR/kWh)

Te

ch

no

log

y-n

eutr

al ta

riff

: 8

.26

31

Wind 19.97 18.24 13.69 7.11 8.33 6.67 8.40 8.98 11.59 7.01 16.33 17.94 9.84

Biomass 20.70 4.74 11.37 9.85 6.50 6.74 7.11 10.46 16.00 3.89 10.48 11.53 8.21

Solar PV 34.65 39.96 30.99 47.30 67.33 45.63 37.96 75.75 29.99

Agricultural &

Industrial Waste14.53 10.11

Municipal Waste 22.02 12.77 4.30

Waste Heat

Recovery6.64

Biogas 12.69 10.21 8.94

Landfill Gas 9.82 9.38 9.49

Geothermal

Energy8.50 17.91 2.34 18.08

Te

ch

no

log

y-n

eutr

al ta

riff

: 8

.26

Many international publications, comparing different countries confirm that Sri Lanka pays the highest prices for minihydro, wind, biomass

Conclusions�� The transition has begunThe transition has begun

�� Several more steps are required to fully implement the Tariff Several more steps are required to fully implement the Tariff Methodology to licenseesMethodology to licensees

�� A five year program to reform customer tariffA five year program to reform customer tariff

�� The Skeptics are manyThe Skeptics are many�� Can the sector ever be profitable ? Can the sector ever be profitable ?

�� Should the Govt ever try to make the sector not to be a Should the Govt ever try to make the sector not to be a burden?burden?

�� It can be achieved using the unique window of It can be achieved using the unique window of

32

�� It can be achieved using the unique window of It can be achieved using the unique window of opportunity available to Sri Lanka (2011opportunity available to Sri Lanka (2011--2015)2015)

�� Wanted:Wanted:

�� The Public Utilities Commission to remain strong and The Public Utilities Commission to remain strong and professionalprofessional

�� The licensees to cooperate and stand strong against The licensees to cooperate and stand strong against outside interferenceoutside interference

�� The customers to stand strong and demand for their The customers to stand strong and demand for their rights and a costrights and a cost--reflective pricereflective price

� Customer vigilance

� Professional support

� Willingness to do better

We can do it !!!

33

� Willingness to do better

Sri Lanka’s First Commercial Wind Power Plant and the First coal-fired power plantlocated side by side in North-west Sri Lanka

34

Power Generation with grown biomass is encouraged, not significantly successful

35

Picture: Dendro Power Plant, Walapane,Courtesy of LTL Ltd