June 12, Colombo: The Public Utilities Commission of Sri Lanka (PUCSL), the electricity sector regulator, has granted conditional approval to the base case plan of the Ceylon Electricity Board (CEB) for long term electricity generation.
The PUCSL Chairman in a letter to the General Manger of CEB said the Commission grants approval for the CEB base case plan subjected to the accommodation of already Cabinet approved "Government to Government power plants" and the "latest Government Policy".
Earlier on 19th July 2017, the PUCSL has approved CEB's Least Cost Long Term Generation Expansion Plan (LCLTGEP) 2018-2037 after an extensive public consultation process.
The Commission prior to arriving at the decision to approve the CEB plan, has requested the Government policy on the fuel mix according to Section 5 of the Sri Lanka Electricity Act, No. 20 of 2009 from the Secretary, Ministry of Power and Renewable Energy on several occasions but the Commission has not received any response from the Ministry.
As no response was received in this regard, the Commission based on the least cost principle as per the Section 43 (8) of the Sri Lanka Electricity Act approved the CEB's Least Cost Long Term Generation Expansion Plan 2018-2037.
However, subsequent to the decision on Least Cost Long Term Generation Expansion Plan 2018-2037, the Cabinet of Ministers has decided its new policy on energy mix for electricity generation on 09th May 2018 and communicated to the Commission via a letter.
The cabinet approved government policy on electricity generation mix is based on four (4) distinct policy elements;
1. Extending maximum attention to environmental conservation by minimizing the carbon footprint of the electricity sector.
2. Maintaining the generation cost at the minimum possible level.
3. Taking account of energy security in deciding the energy mix and targeting future self-sufficiency in the electricity sector.
4. Developing non-conventional renewable energy sources to maximum feasible level and diversify the energy mix.
According to the new policy, the Commission approved LCLTGEP 2018-2037 and CEB submitted base case plan both do not fully comply with the new Government policy. Hence, the Commission has directed the Transmission Licensee, CEB to resubmit the plan complying with the latest Government policy in a letter dated 14th May 2018.
However, the CEB in a letter dated 18th May 2018, has informed the Commission that the plan submitted on 5th May 2017 comply with the policy approved by the Cabinet of Minister on 09th May 2018 and requested approval for the said plan.
The Commission in a letter to the CEB General manger has informed that the Long Term Generation Expansion Plan 2018-2037 submitted by CEB, does not comply with energy mix of the new Government policy.
However, subsequently, several developments have emerged since the Commission had approved Least Cost Long Term Generation Expansion Plan 2018-2037 on 19th July 2017.
Since then the Cabinet of Ministers has approved a new policy on electricity generation mix on 09th May 2018 and as communicated to the Commission has given approval for 1,400 MW of Natural Gas fired power plants to be developed on Government to Government basis.
Furthermore, CEB Engineers' Union demanding approval of Long Term Generation Expansion Plan submitted by CEB on 05th May 2017 has launched Trade Union actions, which has caused many hardships to large number of electricity consumers and has the potential to escalate and cause public nuisance and possible violation of Section 3 (2) of Sri Lanka Electricity Act, No. 20 of 2009 and Condition 30 of the Transmission License by failing to ensure continuous electricity supply.
Therefore, the Commission has decided to grant approval for the CEB base case plan subjected to the accommodation of already Cabinet approved "Government to Government power plants" and the latest Government Policy".
Further, the Transmission Licensee, CEB is required to negotiate and ensure that the generation plants that would be built under Government to Government basis, meet all the technical and economic parameters under the Grid Code and that they are at the least cost, in terms of Section 43 (6) of the Sri Lanka Electricity Act, No. 20 of 2009.
The Commission directed the CEB to submit the Least Cost Long Term Generation Expansion Plan 2020-2039 on or before April 30, 2019 for Commission approval.