Thursday Nov 05, 2026
Thursday Nov 05, 2026
Thursday, 5 November 2026 06:50 - - {{hitsCtrl.values.hits}}
The Public Utilities Commission of Sri Lanka (PUCSL) has estimated a 1.46% increase in electricity tariffs for the fourth quarter of 2026 following its preliminary review of the National System Operator’s (NSO) bulk supply cost submission, down from an initial estimate of 2.88%.
The proposed adjustment is subject to further review, with the regulator inviting stakeholder comments on the cost submissions and the quarterly tariff revision ahead of a public consultation scheduled for today (5).
In its consultation document on the fourth-quarter tariff review, the PUCSL said the NSO’s latest bulk supply cost forecast, submitted on 7 October, amounted to Rs. 125.94 billion, down from Rs. 134.16 billion in its initial submission on 4 September.
The reduction was largely driven by a downward revision in forecast generation energy costs, which fell from Rs. 105.58 billion in the initial submission to Rs. 98.31 billion in the latest forecast. The NSO also revised its expected generation capacity costs down to Rs. 18.98 billion from Rs. 19.94 billion.
Based on the submissions received from the licensees, the regulator initially estimated a revenue shortfall of Rs. 4.44 billion for the quarter, translating into a required tariff increase of 2.88%.
However, following its preliminary assessment, the PUCSL identified several cost items requiring adjustment, reducing the estimated revenue shortfall to Rs. 2.25 billion and the required tariff increase to 1.46%.
Among the adjustments was a Rs. 669 million reduction in Electricity Generation Lanka’s (EGL) generation capacity cost, which the Commission identified as an increase arising outside the Power Purchase Agreement framework.
The regulator also excluded Rs. 1.07 billion in additional costs submitted by Electricity Distribution Lanka (EDL) relating to loan repayments for the Supporting Electricity Supply Reliability Improvement Project (SESRIP). The PUCSL said the cost was not allowable in principle as it related to capital work in progress, with such expenditure recoverable through tariffs only after the assets are completed and capitalised.
Another adjustment concerned the estimated additional cost arising from substandard coal used during the second quarter of 2026. While the NSO had estimated this at Rs. 2.86 billion, the PUCSL’s own estimate was higher at Rs. 4.38 billion.
After accounting for these adjustments, the Commission’s preliminary calculation puts total electricity supply costs for the fourth quarter at Rs. 156.66 billion, against estimated revenue of Rs. 154.03 billion at existing tariffs.
The regulator said the preliminary assessment would be subject to further examination, particularly regarding the adequacy of projected major hydro generation against rainfall forecasts, fuel prices used in cost estimates and the cost-effective utilisation of battery energy storage systems (BESS).
The NSO has forecast major hydro generation of 1,551 GWh during the quarter, accounting for 32.34% of total expected electricity generation. Renewable energy sources, excluding major hydro, are expected to contribute a further 28.81%, while coal is projected to account for 25.68%.
The forecast assumes above-normal rainfall in hydro catchment areas during October to December, based on the Department of Meteorology’s seasonal outlook. The Commission said the hydro generation assumptions would need to be verified against actual generation and water inflow data.
The regulator also noted that the NSO had factored in the connection of 160 MW of battery energy storage capacity during the final quarter, with Rs. 703 million allocated for capacity costs. However, the submission did not provide monthly electricity charging and discharging estimates.
On fuel costs, the consultation document highlighted a significant increase in coal prices compared with the previous tariff determination. Forecast coal prices rise from Rs. 61.42 per kg in October to Rs. 67.44 per kg in December, while diesel is estimated at Rs. 382 per litre and furnace oil at Rs. 210 per litre throughout the quarter.
The PUCSL has invited written submissions from stakeholders on the proposed tariff revision and the underlying cost components by 5 November. An oral consultation will also be held at the Bandaranaike Memorial International Conference Hall (BMICH) in Colombo on the same day from 9 a.m.
The fourth-quarter tariff review is being conducted under the quarterly tariff determination requirements of the Sri Lanka Electricity Act No. 36 of 2024, as amended. No final tariff decision has yet been announced.
