Friday Jan 02, 2026
Friday Jan 02, 2026
Friday, 2 January 2026 00:27 - - {{hitsCtrl.values.hits}}
The Ceylon Electricity Board (CEB) has sought tariff recovery amounting to Rs. 13.1 billion for the January-March 2026 quarter, citing a projected revenue deficit requiring a tariff adjustment of 11.57%, in a formal submission to the Public Utilities Commission of Sri Lanka (PUCSL).
In its tariff revision proposal dated 24 December 2025, the CEB stated that the estimated deficit for the first quarter of 2026 has been assessed based on projected generation, dispatch conditions, cost recovery requirements, and revenue estimates, with any excess or shortfall to be addressed through the Bulk Supply Tariff Adjustment (BSTA) mechanism and considered in the subsequent tariff revision.
“Based on the above analysis, a deficit of Rs. 13.1 billion has been estimated for the January-March 2026 quarter, requiring a tariff increase of 11.57%,” the CEB said, noting that variations in estimates would be accounted for through the BSTA framework.
According to the submission, the estimated total net energy generation for 1Q 2026 is 4,453 GWh, based on the International Monetary Fund’s (IMF) forecast GDP growth of 3.1% for 2026. The CEB has applied an annual electricity demand growth rate of 3.72% for the year, derived from the IMF growth projection.
The monthly net generation forecast for the quarter stands at 1,475 GWh in January, 1,389 GWh in February, and 1,589 GWh in March, bringing the total to 4,453 GWh.
The CEB said its generation dispatch plan has been updated to reflect the latest hydroelectric reservoir data, with current hydro storage conditions across major reservoir systems remaining favourable.
The Board noted that steady inflows received in recent weeks, partly due to Cyclone Ditwah, have resulted in generally stable reservoir levels that are sufficient to sustain projected generation requirements while maintaining operational reliability, subject to evolving weather patterns in the coming weeks.
Beyond hydrological effects, the CEB stated that Cyclone Ditwah caused widespread damage to electricity infrastructure, including transmission towers, distribution lines, transformers, and access roads, necessitating emergency restoration, repairs, and rehabilitation works. The financial impact of Ditwah is estimated at Rs. 20 billion, with Rs. 7 billion allocated to the quarter.
The Board noted that these unplanned interventions increased operational and maintenance expenditure during the period and adversely affected financial performance, contributing to the revenue deficit reflected in the tariff submission.
For sales forecasting purposes, the CEB has projected total electricity sales of 4,286 GWh for the January-March 2026 period after accounting for transmission and distribution losses of 13.2%, consistent with system-level loss assumptions approved by the regulator.
On the cost side, the submission estimates generation and energy purchase costs of Rs. 83.5 billion for the quarter, alongside transmission allowed revenue of Rs. 5.8 billion and distribution allowed revenue of Rs. 7.6 billion. Total allowed cost for the period has been assessed at Rs. 137.1 billion, while estimated revenue at existing tariffs stands at Rs. 113.1 billion, resulting in a revenue deficit of Rs. 13.1 billion.
The CEB also underscored that the current tariff recovery request is shaped by legacy financial pressures arising from delayed and incomplete tariff revisions in previous periods.
The Board stated that accumulated losses, reliance on borrowing, deferred payments to fuel suppliers and independent power producers, and rising interest costs have placed sustained stress on its balance sheet, limiting financial flexibility and reinforcing the need for timely quarterly tariff adjustments.
The submission further refers to unrecovered revenue of Rs. 5.8 billion arising from delays in implementing previously approved tariff adjustments, highlighting the risk of further accumulation of revenue gaps if quarterly revisions are not effected on schedule.
From a regulatory standpoint, the PUCSL is expected to assess the submission against the approved tariff methodology, including compliance with cost recovery principles, loss assumptions, and the treatment of revenue variances through the BSTA mechanism.
The Commission has consistently maintained that tariff revisions must be implemented from the beginning of the relevant quarter and that only costs deemed prudent and compliant with the methodology would be eligible for recovery.
The proposed tariff revision has been submitted to the Commission for consideration and approval, with the CEB stating that the adjustment is required to ensure financial and operational stability while mitigating risks to the reliability of electricity supply.
The outcome of the PUCSL’s review will be closely watched, as it will determine electricity pricing for 1Q 2026 and signal the regulator’s approach to tariff recovery, timing discipline and the management of revenue deficits in future revisions.
