Right now it is very clear how CPC and CEB has become a public burden . Mainly to the lower and middle class people. Looking at thinking behind the tariff structure 90 units seems to have been allocated as "upper class house" looking at the jump. On a practical side to live below 90 units mean you have to have small house and very few electrical appliances . ( Now if you want to use an AC units and water geysers units will jump more than 300. Isn;t this a practical way to figure out who want to lead luxury life) So going with the thinking behind this structure I see if lower middle class want to come to upper middle class it will be a big challege.
Thinking also need to change if we need to develop a country.
Further to my above comments see the below article . I highlighted some key sentences with good and bad . Also this discussion here might be helpful to PUC.
A leading business chamber fears the upcoming electricity price revision could be both unfair and unrealistic.
"We have good reason to believe that the middle class will really suffer as a result of the upcoming electricity price revision, where tariffs for this category of households will be increased by 40 to 60 percent, whereas users of a higher number of units would actually see a decline," Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) Kumar Mallimaratchi said.
The country’s middle class has been growing in recent years.
"The government must be realistic and fair. True the middle class is growing but it cannot milk the cow just because it is there," he said addressing a forum on consumer rights last week jointly organised by the chamber and the Institute of Policy Studies.
Mallimaratchi said a rise in electricity tariffs would affect incomes in the hotels sector as well.
The Public Utilities Commission (PUC) is in the process of collecting views on the revision from the public.
"We are looking for constructive suggestions on how we can reduce costs at the CEB, and not, like most have done, comments that electricity rates are already too high," PUC Director General Dhamitha Kumarasinghe told the forum.
He said the PUC had a thankless task of balancing the interests of all stakeholders.
The CEB, in its submissions to the PUC, has said costs for 2013 would be Rs. 268 billion.
Kumarasinghe said the PUC trimmed down Rs. 40 billion from this because, being a natural monopoly, the CEB had included other incidental costs as well.
"If we receive recommendations which would help us trim down a further Rs. 20 billion, it would be a significant achievement and this is what we want from business chambers and professionals. Even politicians are welcome to make recommendations. The invitation is open to all," he said.
The PUC Director General said the proposed tariff revision does not consider the effectiveness of management at the CEB, nor its dues from other government institutions.
Transmission loss which was 13.7 percent in 2011 was reduced to 12 percent in 2012 and is expected to come down to 11 percent by 2015.
"The 1.7 percent fall in transmission loss in 2012 amounts to a savings of Rs. 5 billion," Kumarasinghe said.
Opposition lawmakers are divided on the matter.
UNP MP Dr. Harsha De Silva said the government has no option but pass-through energy and transport costs to reflect global oil price movements.
"This is the only solution to the problem and it was the UNP that introduced pricing formulae in 2002, which the government rejected outright when it came into power. The Balance of Payments problems in 2008 and 2011/12 were largely caused by not allowing the CPC and CEB to adjust their prices accordingly. And, with the government desperate for financing, the people would have to bear the adjustments to prices," Dr. De Silva earlier told The Island Financial Review.
Dr. De Silva cautions that the government should not try to heap the entire burden (CPC, CEB losses) on the people all at once. "People are already finding it difficult to survive with the cost of living moving up drastically, so the government must give thought to how these price changes would come about. Also, wages should be increased to reflect the changes in inflation, this is only fair."
Dr. De Silva argues that if energy and transport prices were allowed to reflect global realities, then the economy would benefit in the medium to long term. This is because the economy would save when prices are too high. This would also reduce the need for the government to introduce ad hoc tax increases. It would also help contain budget deficit and keep interest rates and inflation stable and under control.
JVP MP Sunil Handunnetti told The Island Financial Review that his party will not support moves to adjust domestic energy and transport prices to reflect global oil price movements.
"Global oil price movements do not apply in Sri Lanka because we have seen the government increase prices when global oil prices fall, and reduce prices when global oil prices rise, depending when elections are being held. The massive losses sustained by the CPC and CEB for decades suggest a structural problem, where graft, inefficiencies, corruption and fraud are the norm. The government, heavily in debt and depending on debt to sustain itself, has no option but pass down price increases on to its ever-willing closest friend, the people. Domestic energy and transport prices would most definitely be increased soon, and it is the people who would have to bear the full brunt of these adjustments. The government may then see its revenues increase and this would be used to finance its excesses, like hosting night races, and the people would be invited to witness Lamborghini races for free as a reward," Handunnetti said.
"There is one way out of this problem. The government has to voluntarily reduce graft, corruption and fraud. This will create space for loss making enterprises to make a recovery. Merely passing down price adjustments on to the people will not work, and it is not fair," Handunnetti said.