New Year shock to people: CEB proposes 11.5% tariff hike, PUCSL review underway

• Proposed tariff revision will come into effect only after a public consultation process

By Chaturanga Pradeep Samarawickrama 

The Public Utilities Commission of Sri Lanka (PUCSL) is currently considering a proposal submitted by the Ceylon Electricity Board (CEB) to increase electricity tariffs by around 11.5 per cent for the first quarter of 2026. PUCSL said the proposed tariff revision will come into effect only after a public consultation process, expected to begin after the second week of January. The final decision will be taken following a legal review conducted by the Commission.

 

A PUCSL official said the proposal will first be studied in detail, after which a consultation document outlining the Commission’s findings will be prepared and published. Subsequently, stakeholder consultations will be held before arriving at a final determination. 

The proposed tariff revision has been prepared taking into account the cost of power generation, transmission and distribution. The CEB has indicated that if projected losses are not recovered through additional cost-covering measures, a tariff increase would be necessary. 

According to the proposal, domestic electricity consumption between 0 and 30 kilowatt-hours (kWh) per month will be increased to Rs. 5.29 per kWh, while consumption between 31 and 60 kWh per month will rise to Rs. 9.41 per kWh. 

Meanwhile, the International Monetary Fund (IMF) has revised Sri Lanka’s economic growth forecast for 2026 downward to 3.1 per cent from an earlier estimate of 3.5 per cent. IMF Asia and Pacific Department Deputy Director Thomas Helbling said the revision reflects a return to the country’s long-term growth trend following a strong post-crisis recovery, rather than renewed economic weakness. 

Based on the IMF’s revised growth forecast, the estimated total net energy generation for the first quarter of 2026 is projected at 4,453 gigawatt-hours (GWh). An annual electricity demand growth rate of 3.72 per cent has been applied for 2026, in line with the IMF’s GDP growth projection. 

The CEB’s cost calculations are based on existing Power Purchase Agreements (PPAs), which define capacity and energy pricing between the CEB’s Generation and Transmission Divisions, as well as with Independent Power Producers (IPPs) and Small Power Producers (SPPs). Energy costs for CEB-owned hydro and wind power plants are considered zero, while thermal generation costs include fuel, start-up expenses and variable operation and maintenance charges. Capacity costs cover fixed operational expenses allocated according to installed capacity. 

Expenditure projections also factor in actual and forecast fuel prices at the CEB boundary. Liquid fuel prices are determined externally by the Ceylon Petroleum Corporation (CPC), while coal prices are based on actual or forecast figures. Updates to fuel prices, exchange rates and VAT have been incorporated using the latest data from CPC and IPP invoices. 

Based on this analysis, the CEB has estimated a deficit of Rs. 13,094 million for the period from January to March 2026, necessitating a tariff increase of approximately 11.57 per cent. Any excess or shortfall in this estimate will be adjusted through the Bulk Supply Transaction Account (BSTA) and considered in the next tariff revision. 

Accordingly, the CEB has submitted its Board-approved tariff revision proposal to the PUCSL, stating that the increase is necessary to ensure financial and operational stability and to mitigate potential risks to the reliability of electricity supply.