Electricity is no longer just about lighting our homes. It is now the backbone of our daily lives, connecting us to the world of convenience and advancement. Amid Sri Lanka’s economic crisis, consumers were hit hard by sharp increases in electricity tariffs, turning a basic need into a growing burden.
In 2024, the Government brought some relief to ease this pressure on consumers during the country’s path to economic recovery. Two significant tariff reductions were introduced on 4th March 2024, with an average reduction of 21.9%, and again on 16th July 2024, with a further average reduction of 22.5%. But this leads us to an important question: what impact did these tariff cuts really have?
To explore the impact of the tariff reductions, CEPA conducted a follow-up study using the same sample of 2613 households across 12 districts from initial research on tariff increases. We analyzed electricity consumption data linked to their account numbers and complemented this with the telephone interviews in December 2024. A randomly selected 1035 households from the initial study were contacted to better understand the household perspective.
Our study shows a clear link between electricity tariffs and household electricity consumption. When tariffs were sharply increased in 2022 and early 2023, electricity consumption dropped across all income levels, Also, our study shows that electricity consumption increased after tariff reductions in 2024, especially following the second reduction in July. Notably, higher-income households increased their usage more than lower–income groups. Many in the lower-income brackets still haven’t returned to their pre-crisis electricity use. This shows that recovery is uneven, highlighting the need for more targeted policies to support vulnerable households on the road to energy recovery.

Figure 1: Average Electricity Consumption by Income Quintile

Despite the reduced tariff, electricity was still out of reach for some. Around 31% of families said it was still unaffordable. Even worse, 7% experienced electricity disconnections after September 2024 due to not paying the bills. These disconnections show that while the policy helped many, it wasn’t enough to protect all families from energy hardship.
We have identified that Electric kettles/heaters and rice cookers were the electric appliances that were mostly stopped during the high electricity tariff period. So we looked at whether those households had resumed using electric kettles/ heaters and rice cookers. Nearly half of those who had stopped using electric kettles/ heaters said that they had started using them again. A similar result was seen for the rice cookers.
The positive impact of the lower tariff was most visible in how households managed their expenses. Overall, half of them said that the savings due to the lower tariff helped them to spend more on essentials like food, healthcare, or education. Others used the savings to pay off their debt (9%) or slightly improve their living conditions by increasing the use of electric appliances (8%). However, for many, the relief was still too small to make a big difference; 36% of household situations remained unchanged.

Figure 2: Positive Outcomes of Tariff Reductions to households

When we asked their suggestions, a strong message came through, Most people (nearly 90%) wanted the government to reduce electricity prices even further. Many also hoped for targeted support, such as electricity subsidies for low-income families. Also, there was a growing interest in renewable energy, too, with people calling for more investment in clean power sources and for the government to encourage its use.
In conclusion, the 2024 tariff reductions brought some welcome relief to Sri Lankan households. They help make electricity more affordable, encourage families to increase usage, and allow many to spend more on their daily needs. But the impact was not equal, while higher–income families bounced back more easily, poorer households remained cautious.
As the results show, the majority of the households interviewed expect low-priced electricity. The country, however, should not go back to the previous practice of providing electricity at subsidized prices, the benefit of which was captured by the non-poor. The poor households definitely need some protection against higher electricity prices. Such protection should be well-targeted, and the possibilities of integrating the targeted support to the poor with the Aswesuma program should be given due consideration.

By Prashani Senadhilankara
Junior Research Professional
Basic Services and Social Protection