• NSO withdraws proposed increase, citing high reservoir levels and rainfall

The National System Operator (NSO) will not seek an increase in electricity tariffs for the final quarter of this year, citing favourable hydrological conditions and expectations of above-normal rainfall, potentially sparing consumers a tariff hike for the October–December period.

The announcement was made at a stakeholder consultation held yesterday (5) on the proposed electricity tariff revision for the fourth quarter of 2026. The NSO said existing reservoir storage levels, together with forecasts of above-normal rainfall under prevailing El Niño conditions, were expected to support hydropower generation over the next three months and reduce the need for an increase in tariffs.

The announcement comes after the Public Utilities Commission of Sri Lanka (PUCSL), in its preliminary review of the NSO's tariff proposal, recommended a 1.46% increase for the quarter, down from the 2.88% increase initially sought by the NSO.

The NSO had projected a revenue deficit of Rs. 4.4 billion for the quarter and sought an increase in electricity sales revenue to cover the shortfall.

According to the PUCSL, the forecast cost of supplying electricity during the quarter stands at Rs. 157.3 billion, while expected revenue from electricity sales is estimated at Rs. 154 billion. A further revenue deficit of Rs. 1.1 billion from the previous period was also factored into the assessment.

The PUCSL reduced the proposed increase following adjustments to generation capacity costs submitted by Electricity Generation Lanka and revisions to the estimated additional costs arising from the use of substandard coal during the second quarter of 2026.

Its assessment also considered electricity demand and generation forecasts, fuel prices, hydropower availability, renewable energy contributions, battery energy storage system costs and additional expenses submitted by Electricity Distribution Lanka.

The NSO had forecast electricity demand of 4,796 gigawatt-hours for the final quarter, with major hydropower expected to account for 32.34% of generation, followed by coal at 25.68% and other renewable energy sources at 28.81%.

The PUCSL had initiated a public consultation process to obtain stakeholder and public views before making its final tariff determination.

The final decision on electricity tariffs for the October–December quarter is expected following the completion of the Commission's review and consultation process.