How reasonable is the electricity hike?

The increase of electricity charges effective from 20 April was opposed by Opposition political parties and trade unions.

Practically every commenter highlighted that the percentage increase for 30 and 60 unit consumers was nearly 50% and the cost of jump from one category to the other. They also mentioned the price increase on high end consumer was only 20%.

But none seem to have noticed that the rate charged on 300 unit consumer is 565% over the 30 unit counterpart.

Prior to the price hike consumers over 300 units were charged Rs. 32 per unit, the highest electricity charge for any category in any country in the whole world. Under the revised tariffs every consumer over 210 units per month has surpassed the world’s highest rate and what wrong have the high end consumers done to become world’s worst offenders?

The estimated electricity usage of a low income family calculation (see table) assumes the usage of six nine-watt CFL bulbs for four hours, a radio for six hours, small TV for three hours and an electric iron for 15 minutes per day or one hour and 45 minutes per week. The resulting power consumption is barely over 30 units or Rs. 200 a month.

No one enjoys the increase in cost of any consumer item, as every person is concerned about expenses. Most families are burdened with the cost of food, household expenses, transport, mobile phone bill and children’s schooling expenses (even in State schools) as travelling  tuition and the increase in electricity costs need to be reckoned with.

But electricity cost even at increased rates is the least of the household expense. The cost increase to 30 unit customers is Rs. 67.50 and for 60 unit customer is Rs. 174, well under Rs. 200.

How far can Rs. 200 go?

With the minimum bus fare at Rs. 9, a daily travel up and down the minimum distance would cost Rs. 600 per month. With number of mobile phones equalling population numbers, each house would have at least one mobile phone with the monthly bill close to Rs. 1,000 used mostly on social calls. Tuition cost for a child in a rural area for large group classes with non-popular teachers would cost minimum of Rs. 750 per month per subject with added travelling and refreshments costs.

The foregoing costs would shoot up with the mode of transport, number of phones at home and the status of the tuition teacher. Thus, even with the price increase, the electricity bill is the lowest of all household expenditure. It would be better for the consumer to bear up the tariff increase and control other costs.

CEB losses

The CEB’s loss for 2011 was Rs. 19.3 billion, which shot up to Rs. 61.2 billion in 2012, mostly due to subsidies and the sharp rise in fuel prices used for power generation. A few days ago a minister stated that the subsidies were bribes given by the Government to the public and every government was guilty.

The CEB’s subsidies are not borne by the Government but shown as losses, which allows the CEB to hide their inefficiencies and corruption. Losses by the CEB or the Government are finally passed over to the consumer, who is called upon to pay.

At the Public Utilities Commission public hearings, representatives from non-consumers of electricity and self-generated hydro-power consumers pointed out that when power users are subsidised, non-power users too are called upon to pay for the resulting price increase of other goods, as such each user should pay for their power consumed.  

Industrialists too complained of power hike and rising cost of production, which is true. But what steps have they taken to reduce their power consumption or to find alternate sources of power? Few years ago ceramic tile producers planned to use gliricidia wood for heating their kilns. But when the Government reduced kerosene prices for the benefit of poor, ceramic tile kilns were converted to use kerosene and manufacturers made massive profits.

The increased electricity tariffs will hurt every consumer and force every consumer to lower consumption, but they could more easily reduce their unnecessary expenses such as mobile phone bills.

Meanwhile, higher domestic consumers will be forced to move over to alternate modes of power. For high-end domestic consumers, a number of private companies offer solar-based power generators with a buy/sell agreement with CEB, which allows payback of investment in around six years. The CEB will be forced to learn that their most profitable high-end consumers are moving away from them.  

Politicians who agitate against the price increase are looking for cheap popularity. An Opposition Member of the Parliament stated in public that the MPs and the Minsters with their heavy security lighting are shielded from tariff increases and continue to pay only Rs. 2,000 per month irrespective of usage.

(The writer is a Chartered Civil Engineer graduated from Peradeniya University and has been employed in Sri Lanka and abroad. He was General Manager of State Engineering Corporation of Sri Lanka and currently employed with a Chinese construction organisation. He can be contacted on [email protected].)