Sri Lanka’s electricity sector has become a space where economics, political pledges, and the daily worries of citizens collide. What should be a predictable exercise of setting tariffs that reflects costs while protecting consumers has instead unfolded as a cycle of hope, relief, frustration, and uneasy compromise.
When the National People’s Power (NPP) Government took office in late 2024, it rode a tide of public expectation. After years of economic strain, many looked for relief in the parts of life that hurt the most. Electricity sat near the top of that list. Campaign rhetoric framed high tariffs as an unfair burden on households and small businesses already grappling with inflation and stagnant incomes. For many families, the promise of lower bills felt less like policy and more like survival.
The pledge resonated because electricity costs cut deeply into monthly budgets. Since the crisis of 2022, consumers have learned how sharply utility pricing can unsettle household finances. In a fragile economy, electricity tariffs have come to symbolise broader questions of affordability and fairness.
Early 2025 appeared to validate those expectations. The Public Utilities Commission of Sri Lanka (PUCSL) announced a 20% reduction in tariffs, effective January 2025. The regulator described the cut as a reflection of cost adjustments and a response to public appeals. Consultations echoed familiar anxieties: households worried about staying afloat, entrepreneurs struggling with overheads, and professionals calling for stability after years of steep revisions.
Yet, beneath the welcome news, structural pressures persisted. The Ceylon Electricity Board (CEB) continued to wrestle with financial strain. Generation costs, driven largely by fuel price volatility, combined with high transmission expenses and longstanding debt obligations, meant that tariff reductions did not automatically ease the utility’s burden. The arithmetic remained unforgiving.
By mid-2025, the CEB sought an 18.3% tariff increase for the July to December period, warning that without adjustment it would struggle to cover operational costs and service debts. The PUCSL approved a smaller 15% hike, challenging cost claims it considered insufficiently justified. Even so, most consumers still paid less overall than in 2024, thanks to earlier reductions.
The latter part of 2025 and the opening weeks of 2026 followed a familiar rhythm of proposals, scrutiny, and debate. In October 2025, the PUCSL declined another increase request, citing affordability concerns and the need for price stability. On a macro level, tariffs had indeed fallen compared with early 2024. From a consumer’s vantage point, the experience often felt less reassuring.
For ordinary Sri Lankans, electricity pricing is rarely understood through percentages or regulatory notes. It is felt when a bill is opened at the kitchen table or when a shopkeeper recalculates expenses late at night. Even a manageable bill can sting when wages lag behind rising food, transport, and education costs. In some communities, households speak of disconnections and abrupt bill swings, reinforcing a sense that electricity costs remain unpredictable and, at times, intimidating.
January 2026 brought another twist. The CEB proposed an 11.57% tariff increase for the first quarter, citing a projected revenue shortfall. The PUCSL rejected the submission, pointing to delays and errors. Technically, it was procedural. Publicly, it fed the perception of a sector trapped in perpetual push and pull.
The political consequences have been inevitable. Supporters of the NPP, who anticipated swift and lasting cost of living relief, have voiced disappointment at how stubborn economic realities have proven. Critics argue that tariff reductions risk looking like short-term gestures unless anchored in credible financial planning. Both reactions stem from the same concern. Can Sri Lanka deliver stability without eroding trust?
Complicating matters further are Sri Lanka’s commitments under its International Monetary Fund (IMF) programme, which emphasises cost reflective pricing for State-owned utilities. The logic is straightforward. Sustained below cost tariffs generate losses that eventually reappear as public debt or taxpayer burdens. Shielding consumers today by suppressing prices may simply defer heavier pain to tomorrow.
This is the dilemma at the heart of the debate. Price relief offers immediate comfort in a society still recovering from economic trauma. Cost reflective tariffs promise sustainability but risk deepening short-term hardship. Regulators must balance consumer protection with the viability of the utility. Governments must reconcile campaign promises with fiscal discipline.