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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Forget CEB: Shift to coal power and save Rs 1 bln daily

Forget CEB: Shift to coal power and save Rs 1 bln daily

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CSE.SAS

CSE.SAS
Global Moderator
By Marcus Perera, Bsc.Eng (Cey), Dip.EE(Lond), FIET(Lond), FIE(Sri Lanka)

The proposed flat power rate tariff is more draconian than the flat rate tariff that the Supreme Court threw out in 2008. The proposed flat rate tariff, in addition to being flat rate, is also a fuel adjustment charge; so how can the Public Utilities Commission (PUC) even dream of such a tariff without consulting the Supreme Court? This further violates our fundamental rights as it increases one of the highest cost electricity in the world by over 50 per cent.

Even the previous tariff increase by midnight gazette in 2012 was unlawful, and is very similar to a flat rate tariff. The PUC, the Power Ministry and the Ceylon Electricity Board (CEB) violated the Electricity Act and the CEB Act and cast such a massive burden on we the people while, at the same time, making us feel guilty of wasting electricity by way of a massive media blitz in 2012 which cost about Rs. 200 million.


Norochcholai plant
This campaign also appeared to indicate that we are having one of the highest per capita consumptions of electricity in the world, while, on the contrary, we have one of lowest, only 398 units per year. This can be compared to Malaysia, 3,724 units, and USA, 12,747 units, which also indicates that the per capita unit consumption is an indication of the socioeconomic development of the people. However, the PUC, while imposing on us these draconian tariffs, is not even planning for accelerated coal power Build Own Operate (BOO) or Build Own Transfer (BOT) projects as many are needed for the socioeconomic development of the people.

I have been writing to the President from 2007 to 2011, on the benefits of accelerated BOO or BOT coal power projects, but there has been no worthwhile response from the Presidential Secretariat, or the Ministry of Power, or the Public Utilities Commission (PUC) to which this letter has been sent along with a letter to me from the Presidential Secretariat stating “necessary action will be taken by them in due course”. My letter directly states, with supporting documents, that because of the present policy of the Power Minister and former Power Ministers, the CEB will operate as a loss incurring organisation in spite of we, the people being given one of the highest electricity tariff in the world resulting in colossal losses to us, the people and our country and thereby casting on us the people, unbearable cost of living and a very low standard of living. The abovementioned letter indicated the following points:

1.That the colossal losses, by not having coal power as base load an economical hydro with large reservoirs as peaking power, is estimated to be Rs. 1.127 billion per day. The computation to establish the loss as Rs. 1.127 billion per day is as follows; Replacing the 6.5 billion units per year of very high cost oil and the so called very high cost, unconventional renewable energy in the shortest possible time by BOO or BOT coal fueled projects we will be saving per year about 22 x 6.5 = Rs. 143 billion, and, per day, about Rs. 391 million. This is a colossal amount and another 2 x 391 = Rs. 782 million per day when we replace all our transport, from oil fueled, to electricity fueled. This is based on the assumption that all our transport consumes about two times the oil consumed for electricity generation at present, and the maintenance costs for electric vehicles including replacement of batteries every 10 years is 30 per cent of the maintenance cost of oil fueled vehicles, saving a colossal Rs. 1,173 million per day. These savings of over a billion rupees per day could also result in the rupee appreciating to at least Rs. 50 to a US dollar, because if we get a unit at US 7 cents, then a unit will cost only Rs. 3.5. It can be observed that, when we had low cost electricity in the early 1980s, the rupee was only Rs. 15 to a US dollar and Rs. 25 to a UK pound.

2. That such colossal losses are caused by the Power Minister, the PUC, the CEB and the Ministry of Power (the four authorities) contravening their statutory duties in not giving us the cheapest thermal electricity in the world, coal fueled thermal electricity as base load and the cheapest peaking electrical power in the world, economical hydro of which we have about 4.4 billion units per year, as peaking power, thereby depriving us, the people of our fundamental rights as given in Chapter 3 of our constitution.

3. That our electricity is one of the highest cost electricity in the world because of the failure to generate thermal coal fueled electricity which is the lowest cost thermal electricity in the world. Thus causing us the people and our country untold hardships. The four authorities have been increasing the price of electricity in spite of a decision from the Supreme Court against the flat rate tariff in 2008, and, in 2012, a similar tariff has being imposed on us by the PUC by midnight gazette and now a more draconian tariff is proposed.
It is also apparent that the midnight increase in tariff is similar as the flat rate tariff the Supreme Court threw out in 2008, in the flat rate tariff the rate per unit in the uppermost block is applied to all the units, in the present case the fuel adjustment charge in the uppermost block is applied to the total bill. The midnight increase in tariff has been carried out quoting Section 30 of Electricity Act. However, Section 30 (b) should be carried out only after sections given above for economical electricity have been carried out. Also, Sections 52 (2) and 52 (3) of the CEB Act also state that a month’s notice should be given by the CEB for a tariff change and also the manner of its implementation.

4. That when acting in accordance to the statutory duties, the CEB has to implement accelerated coal power projects to make up for the 15-year delay in the coal power programme, as thermal electricity using coal is the cheapest thermal electricity in the world and also since our per capita carbon emission of 0.61 metric tonnes per year is very low compared to Malaysia, a developing country (6.7 metric tonnes), and USA, a developed country (19.78 metric tonnes), which is 10 times and 30 times more, respectively, and, as such, there should not be any concern regarding carbon emissions. It is also estimated that a kilogramme of coal gives 2 kWh or 2 units and 1 unit emits 1,000 grammes or 1 kg of carbon, all this information can be obtained from the Internet.

5. The above data can be used to compute that even if we have seven coal power stations the size of Norochoholai, outputting a total of 49 billion in units per year, our per capita carbon emission per year will not exceed 49 x 109 / 21 x 106 = 2,300 kg = 2.3 metric tonnes, assuming a population of 21 million people, and 1,000 kg = a metric tonne. As such, there is no threat of carbon emissions to our country by planning for as many accelerated coal power projects as required for our country, and for the socioeconomic development of we, the people and for us to have a per capita consumption at least close to Malaysia, for we can have 10 such power stations the size of Norochcholai giving 70 billion units per year, with our present demand being only about 11 billion units per year, our per capita carbon emissions per year will be only 3.3 less than Malaysia, a developing country, which is at present responsible for 6.7. Our carbon emission could be reduced by 30 to 40 per cent if we have super critical temperature and pressure boilers and turbines and our per capita unit consumption will be 3,240 with Malaysia being presently at 3,725 units per year and our present per capita unit consumption being 398.

6. Bearing in mind the statutory duties of the four authorities, with which they have failed to comply, and, as such, causing colossal losses to our country, and we, the people, thereby denying us our rights. The following gives documentary proof to establish the fact that they have failed to carry out their statutory duties, and also that all these problems that we, the people are having are due to not having the cheapest base load electricity in the world (coal fueled thermal electricity) and the cheapest peaking power in the world (economical hydro with large reservoirs).

It should also be mentioned that in the mid-1980s two Sri Lankan consultants forecasting the present scenario of extremely high cost of electricity, if oil was still being used for electricity, also proposed the above concept to be implemented by the mid-1990s when thermal power has to be the base load and it was accepted by the CEB.

7. That it should be apparent from the above that thermal electricity generated using very expensive oil is the only reason for the very high cost of electricity to our country instead of very low cost from coal. As such, the cost of electricity to our country, without subsidies, is very much more than the high average price we pay. This has resulted in the CEB being unable to act in accordance, to its statutory duties and also to its mission statement and is the only reason the CEB is debt ridden. Comparative cost per unit of electricity in USA from different fuels which comparison will be the same for our country is taken from the Internet. Comparative cost per unit of electricity in USA from different fuels which comparison should be the same for our country, from which it can be seen the cost from natural gas which is LNG or oil is two and a half times as much as from coal. The accurate comparison for our country should be given by the CEB engineers and the PUC, as it is their duty to do so.

8. That if our country had coal power as base load and hydro as peaking power in 2011 electricity price for hydro at the retail level would cost Rs. 3 + Rs. 3 = Rs. 6 per unit and coal at retail would cost Rs. 8 + Rs. 3 = Rs. 11 per unit, with Rs. 3 per unit being added for the cost of transmission and distribution. And since 35 per cent is from hydro and 65 per cent from coal, the average cost per unit would have been about Rs. 9.25 as the retail price for consumers. This would have resulted in cooking with hot plates, not microwave cooking, which is much cheaper than gas. The equivalent of a gas cylinder by hot plate cooking costs about Rs. 900 only. More accurate figures could be obtained if the CEB engineers are called upon to give their figures. Some of the benefits we would have received if we had coal power are very low transport cost by electrification of the railway, the use of electric vehicles, using hydrogen fueled vehicles by making use of fuel cells, lift irrigating also for drinking water, distillation of sea water for drinking water and salt.

9. That, due to the absence of coal power as base load and economical hydro as peaking power, there is a colossal loss to us, the people and to the country. These colossal accumulated losses from 2000 are estimated to be over Rs. 568 billion by 2012 and, by 2020, over Rs. 1,100 billion computed at prices in 2007 but at present prices it is very much more. It is a known fact that COPE (Committee on Public Enterprises) has unlimited powers to investigate the four authorities who have jointly, unlawfully caused these colossal losses to us, the people and to our country by not giving us sufficient cheap thermal power in the world and continuing to do so.

10. That it should be made known that renewable energy such as Solar panels, Dendro, Wind Mills, Mini Hydro are not suitable for CEB Grid, as these forms of power generation are very expensive. And only small amounts of units can be obtained from them per year, with them not being reliable also. Since our country has about 35 per cent of our electricity generated with very cheap renewable energy, and since our per capita carbon emission is very low, there is no international or moral obligations for Sri Lanka to have such type of unsuitable, uneconomical power connected to the grid but on the other hand such type of uneconomical electricity are contravening the statutory duties of the PUC and the CEB. If they are connected to the grid, then the CEB System Control Centre will not be able to control the system load in an efficient and economical manner. From the above, it could be seen that such type of renewable energy, which are very expensive, inefficient and unreliable, and with low plant factor, these are not in accordance with Section 11 of the CEB Act. The PUC has not even studied whether or not solar panels are beneficial prior to these being introduced to our rural areas, at tremendous cost to the consumer, and to the state, before it gave licenses to connect solar power to the grid without publishing the price per unit.

11. That it has to be mentioned that BOO or BOT coal power projects may bring in super critical pressures and temperatures boilers and turbines pressures of 4,495 psi and temperatures of 1,382 degree Fahrenheit in which Australia and Japan have a lot of experience with China also recently adopting this technology to replace their old coal power stations which are now 30 to 40 per cent more efficient and therefore carbon emissions have been reduced by 30 to 40 per cent.

12. That it should be stated that the CEB System Control Centre (SCC) should be permitted to carry out its functions without outside interference as there will be catastrophic results if there is interference with its functions as happened in resulting in unannounced power cuts in 2011.

13. That the main functions of the CEB SCC are as follows: The CEB System Control Centre (SCC) does not depend on the Meteorology Department weather forecast to draw out water from the reservoirs as believed by many in their ignorance, but the draw out from each reservoir is according to computer programmes taking into account weighted rainfall in the catchment area during the previous two to three weeks and the level of the reservoir. From these data the draw out is computed with the objective of having the reservoir full by the end of November and also not preventing it to spill by the end of November. The prevention of spilling can be done with no risks only if there is plenty of coal fueled electricity, by also predicting the rainfall and the load up to end of November from the previous pattern of rain fall and resorting to mid-course corrections by computer programmes, if required, also keeping in mind that the units that could be expected from hydro is about 4.4 billion units per year.

14. That a comparison of coal and oil will show that oil should never be used on our grid for price per unit from oil will be increasing rapidly, as proved oil reserves would last only 46 years, while coal production is widespread and the proved reserves that can be recovered economically can last about 118 years unlike oil and gas which will last 46 years and 59 years, respectively. As such, there are no security power problems nor price varying problems with coal fueled electricity. This information, from the World Coal Association, can be obtained from the Internet. Also, to establish that the price of coal will not vary much, one can obtain from the Internet a report from the Bank of America that stipulates these facts. This is also confirmed from a document from TopForeignStocks.com.

The consultation of the public by the PUC is an eye wash. Nothing will come from it, unless there is a big subsidy given by the government. At the end, it is we the people who will be paying for the subsidy due to the negligence of the PUC.

(The writer is an academically and professionally qualified Sri Lankan engineer, who at the age of 82, has long since retired. With considerable experience in thermal power, in Sri Lanka and abroad, he witnessed the first oil shock, in 1973, when a barrel of oil rose in price to US$ 10, from US$ 1.8, and the second oil shock, in 1979, when the price of a barrel of oil further increased to US$ 20, which necessitated most countries’ engineers to switch to coal or nuclear for the production of electricity.)
http://forum.srilankaequity.com/t27044-rumblings-at-the-sec#158126

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