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LIRNEasia recommendations on proposed electricity tariffs 2013

LIRNEasia recommendations on proposed electricity tariffs 2013. Rohan Samarajiva. O ur recommendations. Government policy requires cost-reflective tariffs. We support the new tariff design. As the beginning of a multi-year process to establish cost-reflective tariffs

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LIRNEasia recommendations on proposed electricity tariffs 2013

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  1. LIRNEasia recommendations on proposed electricity tariffs 2013 RohanSamarajiva

  2. Our recommendations

  3. Government policy requires cost-reflective tariffs

  4. We support the new tariff design • As the beginning of a multi-year process to establish cost-reflective tariffs • Because it creates strong incentives for managing demand which is of critical importance until Norochchalai II is operational • But we are not focusing on the specific numbers proposed by CEB

  5. Last 5% of supply needed to meet peak demand is as expensive as first 50% of supply

  6. Tariff increase will cause significant short-term pain for consumers aspast policy mistakes are remedied • But fairness requires that pleasure is shared as well as pain • Assess actual consumption patterns and costs • If peak demand is lowered, give rebates to consumers • Costs will radically decline when Norochchalai II becomes operational • Use some savings to repay loans but give customers a rebate, while maintaining movement toward cost-reflective tariff design

  7. Immediate remedy: Rs. 150 subsidy to Samurdhirecipients • Why Samurdhi? • Means-tested recipient group • Easy cash transfer possible • Consuming under 50 units = “energy poor” • Cost today for 50 units = 308.4 • Cost under proposed tariff = 465 • Difference ~ Rs. 150 = subsidy per family per month • ~LKR 2.7 billion in total subsidy for ~1.5 million households on Samurdhi

  8. Our recommendations

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