ECONOMYNEXT – Sri Lanka is planning to move towards fairer electricity tariffs, reducing large discriminatory gaps between services and industry and domestic users above 90 units, the Public Utilities Commission officials said.
Under current tariffs general purpose users are penalized for not operating either and industry or a hotel with big gaps.
Based on average unit prices charged under tariffs from June 12, disclosed by the regulator, the penalty for not running an industry went up to 20.14 rupees from 17.81 rupees before June.
The penalty for not running an industry was 20.14 rupees after June up from 17.18 rupees under the old tariffs.
Before the January 2025 tariff cut, the penalty for not running an industry was only 14.52 rupees for general purpose customers and the penalty for not running a hotel was 15.12 rupees.
“Basically, the highest tariffs is on high end domestic users and GPs,” PUCSL Director General Damitha Kumarasinghe said.
“The GP tariff (from June 12) is equivalent what is was before January.”
Related : Sri Lanka electricity tariff hiked 15-pct from June 12
The increase in GP this time 14 percent, less than the 15 percent for the hotels are industry, though the base was high.
“This time as a percentage we have not increased GPs more than others,” Kumarasinghe said.
“We kept it at a certain level, in order to transition into a more fairer tariff for everybody.”
“You cannot do it overnight, but there should be some way of moving forward and narrowing it (the gap).”
While some countries charge business customers based on the type of supply (low tension, high tension and contracted prices) some others charge customers based on type of business for reasons that are not clear.
However, in Sri Lanka the gaps are very high.
Average cost was around 27.80 rupees a unit now, Kumarasinghe said.
Under current tariffs in Sri Lanka general purpose customers have to pay double to price of industry and hotel based on average costs disclosed by the regulator.
One of the problems of giving preferences tariff to some businesses and overcharging others is that it places the government and the power regulator in charge of the future direction of the economy and business decision of the public, and may unwittingly hinder long term change and economic transformation.
Penalizing general purpose for example may hold back countries from transitioning to services, especially services exports, and the creation of high paying jobs, which may lead to migration of qualified people to countries where there is no discrimination against services, analysts say.
Religious establishments also get knock down prices where the government and the regulator is gaining ‘merit’ at the expense of cross-subsidizing through general purpose and large householders.
In Sri Lanka domestic users also pay high marginal tariffs.
The rationale in Sri Lanka for charging small users, lower prices was because the PUCSL allocated the cheapest source of power from the fully depreciated large hydros to smaller customers, Kumarasinghe explained.
The marginal cost of extra generation is allocated to high users.
However industries are also among the biggest users of power raising questions over the practice.
Large households are charged unit prices as high as 61 rupees, from June, up from 52 rupees, which is over double the costs.
Household customers however are responsible for the night peak, which is a key cost for utilities.
However, households get the benefit of the smaller brackets which everyone is entitled to under the current system, may help up to certain level. Some large users, who are rich have also installed solar power to escape the high tariff, forcing those in the middle to pay high prices. (Colombo/June12/2025)