The Public Utilities Commission of Sri Lanka said the CEB had submitted estimated cost of 268 billion rupees for 2013 is seeking a tariff hike.
The regulator said in view of better rainfall, it was reducing 22 billion rupees allocated for purchase of power from private producers.
The utility said it was cutting a further 5 billion rupees in capital expenditure identified as non-essential and another 6 billion rupees in expenses identified as not relevant to the supply of power.
Sri Lanka subsidizes power to several segments of the population including small households, temples, churches and mosques, large industries some of which serve affluent customers in Europe and America.
Power is also subsidized to state health and educational which should be covered by the respective budgets for the sectors.
Meanwhile larger households are charged exorbitant rates.
Under Sri Lanka's power regulatory system the utility can ask for tariff revisions every six months.
Preventing the energy utilities from running up large volumes of debt is essentially to keep Sri Lanka's inflation down, exchange rate stable which helps protect the real value of salaries of wage earners and accumulated savings deposited in banks.
Large volumes of bank loans taken to subsidize energy from mid 2011, which were ultimately accommodated with central bank credit (printed money) pushed Sri Lanka into a balance of payments crisis which sent the rupee falling from 110 to 134 to the US dollar.
The rupee has since appreciated to around 127 to the dollar.
The power regulator said the CEB could now submit tariff revision based on the allowed expenses of 233 billion rupees for 2013.
"Cost estimates filed by the CEB and proposed tariff revisions will be subject to a process of stakeholder c consultation," the regulator said.
"Public views as well as government policy will be considered before any approval of cost estimates filed by CEB or any revisions to the current electricity tariff."