Jul 26, 2016 (LBO) – Sri Lanka’s Public Utilities Commission (PUCSL) today launched training for regulatory accounts for Ceylon Electricity Board (CEB) and the Lanka Electricity Company staff.
The two utilities are required to prepare and submit their accounts according to the newly introduced accountancy guidelines by the Commission by year 2017.
“The regulatory accounts are all about transparency and fairness. So under this newly introduced regulatory accounting guidelines, what we are trying to do is that to make the tariff fair to the customers, fair to the utilities, and fair to the government,” Damitha Kumarasinghe, director general of PUCSL said.
The newly introduced guidelines will also help the commission to gain more information to help in decision making procedure.
“We have been waiting for a long time to have cost reflective tariff in this country and although the PUCSL has been in function and the Electricity Act has been in forced, we have never had a cost reflective tariff in this country,” Anura Wijepala chairman of CEB said.
“If we make cost reflective to the tariff, and if the cost is sky rocketing, and the people cannot reach it, then I think this is not good.”
He says that monopolies cannot survive in this world unless they are well regulated with checks and balances.
“The PUCSL is the right organization for that and therefore we should give the fullest corporation, so that we can get the right prices, give the right picture to the people and therefore people would always have the confidence in CEB.”
According to the tariff methodology designed by the Commission, the determination of allowed revenue requires information at the generation unit level.
Therefore, it is required to prepare separate accounts for each of the licensed business which will allow the Commission to obtain financial and non-financial information of the licensees.
However the existing accounting system of the CEB is structured under nine divisions which have no accounting segregation for regulated and non – regulated business activities such as air conditioning, refrigeration and lift installation business.
Therefore, a regulatory accounting system is required to bridge the gap between accounting information currently available and information that is required by the Commission for making decisions.
But separate books of accounts need not to be maintained as most of the information required for regulatory accounts can be extracted from the records maintained for statutory accounts with certain modification to the chart of accounts.
The proposed guideline for preparation of regulatory accounts establish a mechanism for licensees to prepare and submit regulatory accounts, and includes a set of accounting policies and principals, uniform system of accounts, disclosure requirements, principal for cost attribution, allocation and transfer pricing, audit process, principals for reconciliation of regulatory accounts with statutory accounts, templates for the preparation of regulatory accounts etc.
The Commission said the first set of annual regulatory accounts will commence from 1st of January 2017.