Sri Lanka is beginning a long-overdue reform of its power regulation framework, aiming to eliminate unfair electricity pricing that has disproportionately burdened general-purpose users and high-consumption households. The Public Utilities Commission (PUCSL) is leading efforts to reduce steep tariff disparities between service-sector consumers, industries, and hotels, with a phased strategy to create a more balanced and equitable energy system.
PUCSL Takes First Steps Toward Tariff Equality as Service Sector and Households Bear the Burden of Discriminatory Rates
Regulator Pushes for Fairer Electricity Tariffs
Sri Lanka’s Public Utilities Commission (PUCSL), the country’s power regulator, is working to create fairer electricity prices. The goal is to fix big price differences between service businesses, industries, and households that use a lot of power.
PUCSL says the current system charges general-purpose (GP) users—like offices and shops—much more because they aren’t classified as industries or hotels, even though they often use the same or less electricity.
Power Regulation Penalizes General-Purpose Users with Higher Tariffs
According to PUCSL data from June 2025, the penalty for not being classified as an industry rose to Rs. 20.14 per unit, up from Rs. 17.81 a few months earlier. Before January 2025, general-purpose (GP) users paid Rs. 14.52 per unit, while those not qualifying as hotels paid Rs. 15.12.
“Highest tariffs are on big domestic users and GP customers,” said PUCSL Director General Damitha Kumarasinghe. “This time, we did not raise GP tariffs more than others. We kept increases steady to move toward fairer prices for all.”
Power Regulation Reform Takes a Gradual Path Forward
While hotels and industries saw a 15% rise in tariffs, GP users were subjected to a 14% increase—smaller in percentage but starting from a much higher base. Kumarasinghe emphasized that achieving fair power regulation requires a phased approach. “You cannot do it overnight,” he said. “But there should be a way of moving forward and narrowing the gap.”
Sri Lanka’s Power Regulation Method Widens the Pricing Gap
In contrast to global norms, where electricity is priced based on technical supply categories (e.g., high or low tension), Sri Lanka bases tariffs on business classification—a less transparent system that creates wide disparities.
General-purpose users now pay nearly double what industrial and hotel consumers are charged on average, according to PUCSL figures. Experts argue this places unnecessary constraints on the economy and positions the government as a gatekeeper for which industries thrive.
Distorted Power Regulation May Undermine Services and Job Growth
Analysts warn that such power regulation practices could harm Sri Lanka’s long-term economic transformation. Overcharging service-oriented businesses may delay the shift to a modern services-based economy and suppress the emergence of high-paying jobs, especially in export-driven sectors.
“Penalizing general-purpose users discourages service sector expansion,” one economist noted. “This could trigger brain drain as skilled professionals seek fairer markets abroad.”