Thread by @DefaultLk

In a previous tweet, we gave an explanation of what the increase in someone’s electricity bill would look like in rupee terms, instead of focusing only on the % increase.

https://twitter.com/DefaultLk/status/1558362262909648896?t=9Qf5N9qFBNs8zUOBVW9R8Q&s=19

#DefaultLK #EconomicCrisisLK

1/ Although the bills go up, a less focused fact is that the subsidy for lower-end users actually increases substantially (details below). Looking at the whole evidence implies that there is little to suggest the tariff hike is as regressive as a first glance might suggest.

2/ The main reason for the increase in tariffs is the rise in generation costs for the CEB, stemming from the rising price of oil and higher foreign exchange costs. In a recent PUCSL conference, the following was provided

https://twitter.com/Economynext/status/1552507968435806208

3/ Using this data, although the tariff charges have gone up across the board, the relative subsidy has actually increased for lower-end customers. The lower the generation cost settles at, the more progressive the subsidy adjustment becomes.

4/ A common question is on how much of revenue CEB gets from lower-end vs higher-end consumers anyway. The following table shows that consumers consuming over 180 units provided ~22% of CEB’s revenue increase, despite only accounting for ~3.3% of consumers.

5/ However, the biggest increase for a lower-end consumer isn’t the tariff increase itself, but rather the increase in the fixed cost. Adjusting for this shows that the proportions of revenue have only moved on the margins, and could have been done to make it much fairer.

6/ All of this is an approximation, and actual costs for each band vary. There is also an upper limit to how much higher-end tariffs can be raised before those consumers switch to solar energy and move off the grid entirely, reducing the ability to get extra revenue to subsidize.

7/ These facts don’t suggest that CEB is all nice and good. There are plenty of problems that still remain, and more that could be done on tariffs as well. Instead, it aims to add further context to the discussion, and move away from focusing on a single number alone.