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Prices should be fair for the both consumers as well as CEB, LECO and other investors. This means, price regulation is intended to restrict economically unjustifiable profits to the investors, but still provide them with a reasonable return on their investments. There is no legal provision presently, for the price determining authorities to provide fair pricing

Sri Lanka Electricity Act: Empowering electricity consumers

By Damitha Kumarasinghe, Deputy
Director General- Public Utilities
Commission of Sri Lanka

During the last few decades, many utilities worldwide, transformed their electricity industries, in order to achieve economic efficiency and social objectives. One of the main such changes is the introduction of new regulatory regimes with specialised regulatory institutions.

Keeping in line with the international best practice, the Government of Sri Lanka is in the process of enacting the Sri Lanka Electricity Bill. The main objective of this proposed Sri Lanka Electricity Bill 2009 is to provide for the regulation of generation, transmission, distribution, supply and use of electricity in Sri Lanka. This proposed Act will empower the Public Utilities Commission of Sri Lanka (PUCSL) with regulatory responsibilities for the electricity sector.

The proposed regulatory regime is intended to provide benefits to all stakeholders of the sector, which includes, but not limited to, Ceylon Electricity Board (CEB), Lanka Electricity Company (LECO), other private generators, village electricity schemes, the Government and all consumers and prospective consumers.

This article examines the benefits of enacting the Sri Lanka Electricity Act of 2009, for two of the most important stakeholder groups; the existing consumers of electricity and the prospective consumers of electricity.
Public Utilities Commission of Sri Lanka (PUCSL)

PUCSL is a government institution established by an Act of Parliament, comprising of five Commissioners, with each member, at least qualified and experienced in engineering, law and business management. It will have a small staff comprising of mainly well trained professionals in engineering, economics, finance, law and business management.
Some of the main objectives of the PUCSL (as per PUCSL Act) related to Electricity industry are;

a) Protect the interests of the consumers
b) Promote efficiency in both operations and capital investments
c) Promote efficient allocation of resources
d) Promote safety and service quality
e) Benchmark against international standards
f) Ensure that price controlled entities act efficiently, do not find it unduly difficult in financing their activities

Therefore, it is mandatory for the PUCSL to safeguard the interests of all stakeholders, not only the price controlled utilities such as CEB and LECO but also, presently marginalised electricity consumers.

Electricity Consumer Expectations
Electricity consumers have many expectations. Primarily, fair pricing of electricity. Apart from that, consumers are very much concerned of the supply quality and reliability, access to electricity, issues of socio-economic groups of the society, rights of the consumers, dispute resolution and of course, they expect some authority to listen to their concerns and understand the issues. Letís examine how the proposed Sri Lanka Electricity Act addresses these consumer issues.

Fair pricing

Prices should be fair for the both consumers as well as CEB, LECO and other investors. This means, price regulation is intended to restrict economically unjustifiable profits to the investors, but still provide them with a reasonable return on their investments. There is no legal provision presently, for the price determining authorities to provide fair pricing.
The PUCSL is legally directed by the proposed Electricity Bill to follow the cost reflective pricing policy guidelines approved by the Cabinet of Ministers. The cost reflective implies that, only the cost of efficient operations will be taken into account, in determining the tariff.

Furthermore, examining the objectives of the Commission under the PUCSL Act, the Commission shall:
a) Protect interests of all consumers
b) Ensure that price controlled entities acting efficiently, do not find it unduly difficult in financing their public utility industries
Therefore, it is a responsibility legally entrusted upon PUCSL, to determine fair electricity pricing for the consumers as well as the utilities.

Quality and reliability

The proposed Electricity Act allows regulations to be made determining the standards of performance, which have to be met by the suppliers of electricity.

Some examples for intended performance standards are, time taken in restoring supplies after a fault, connecting a new premises to grid, time taken to respond customer complaints, etc. These performance standards will be publicly available and all consumers will be educated on the subject.

It is expected, over a period of time, that these performance standards will be improved, resulting in high quality and reliable electricity supply to all. Therefore, these new legal requirements will be highly beneficial to electricity consumers.
Requirements of different socio-economic groups

This is a very important aspect in our society. Presently, there is no legal requirement to consider concerns of different socio-economic groups. This includes low-income support for the use of electricity. The proposed Act clearly indicates that the Cabinet of Ministers should formulate policy guidelines considering the requirements of different socio-economic groups, thereby, ensuring equal attention to all socio-economic groups in Sri Lanka.

These policy guidelines will be published and, as an advisor to the Government on policy, the PUCSL needs to provide the information gathered through public consultations and consumer consultative committee (discussed later) to the Cabinet of Ministers, in order to come up with more informed policy guidelines.

Rights and obligations of consumers

Majority of electricity consumers, at present, are not aware of their associated rights and obligations. Therefore, it is imperative to ensure that, consumers are aware of their rights and obligations. One of the functions of the PUCSL, according to the proposed Act, is to publish a statement setting out the rights and obligations of electricity consumers. Therefore, it is the duty of the PUCSL to educate the general public on their rights and obligations as electricity consumers.

Dispute resolution

Under the PUCSL Act, as well as the Sri Lanka Electricity Bill, PUCSL is required to formulate dispute resolution procedures for the sector. The most common dispute is a dispute between an electricity supplier and a consumer. Presently, there is no third party to look into those disputes and mediate, to arrive at a mutually acceptable solution. Therefore, enactment of the proposed Act will be highly beneficial to the consumers and suppliers of electricity.

Prospective consumers

There are around four million people- around 20% of the population, without access to grid electricity. The electricity supply industry should take this seriously and provide them the services as soon as practically possible. In the present context, there are no incentives or legal requirements for the electricity suppliers to extend their services to these communities.
Letís examine how the proposed Act deals with this issue. The Act clearly states that, the CEB shall submit electricity distribution expansion plan indicating the geographical areas in which it proposes, during a period of 15 years, to obtain licenses. Therefore, during that period, the CEB is legally required to stick to the expansion plans and provide electricity accordingly. Therefore, people will exactly know when their villages will receive electricity and above all, it is ensured through legislation.

Consumer Consultative Committee and public hearings

Consumer Consultative Committee (CCC) shall be appointed by the PUCSL according to the PUCSL Act. The main functions of the CCC are:
a) Monitor whether the needs of consumers of goods or services provided by any public utilities industry, are satisfied
b) Promote awareness of the standards prescribed or determined under the PUCSL Act and the rights of consumers, with respect to those standards

This ensures that the public will be consulted on these requirements and their concerns looked into. Presently, there is no such mechanism available to obtain consumer views and address the concerns of the consumer.

At present, there are no legal requirements or, an institution to look after the electricity consumer interests, except the PUCSL. Therefore, empowering the PUCSL with the Sri Lanka Electricity Act, is empowering existing as well as prospective electricity consumers.