NSO decides against seeking electricity tariff hike for Q4 2026

The National System Operator (NSO) has announced that it will not seek an increase in electricity tariffs for the fourth quarter of 2026, covering the period from October to December, citing favourable hydrological conditions and expectations of above-normal rainfall.

The announcement was made during a stakeholder consultation held today (05) regarding the proposed electricity tariff revision for the final quarter of the year.

According to the NSO, the decision was based on prevailing reservoir storage levels and forecasts of above-normal rainfall under the prevailing El Niño conditions.

The anticipated rainfall, together with existing water reserves, is expected to support hydropower generation over the coming three months, reducing the need for an electricity tariff increase, the NSO noted.

Previously, the Public Utilities Commission of Sri Lanka (PUCSL), following its preliminary review of the tariff revision proposal submitted by the NSO, recommended a 1.46% increase in electricity tariffs for the October–December quarter.

The NSO had initially requested a 2.88% increase in electricity sales revenue, citing a projected revenue deficit of Rs. 4.4 billion for the fourth quarter of 2026.

According to the PUCSL, the total forecast cost of electricity supply for the quarter stands at Rs. 157.3 billion, while expected revenue from electricity sales is estimated at Rs. 154 billion. A further revenue deficit of Rs. 1.1 billion from the previous period has also been taken into consideration.

However, following its preliminary assessment, the PUCSL reduced the proposed tariff increase from 2.88% to 1.46%.

The reduction follows adjustments to generation capacity costs submitted by Electricity Generation Lanka (EGL) and revisions to the estimated additional costs associated with the use of substandard coal during the second quarter of 2026.

The review also took into account electricity generation forecasts, fuel prices, hydropower availability, renewable energy contributions, battery energy storage system (BESS) costs and additional expenses submitted by Electricity Distribution Lanka (EDL).

The NSO had forecast electricity demand of 4,796 gigawatt-hours for the fourth quarter, with major hydropower expected to account for 32.34% of total generation, followed by coal at 25.68% and other renewable energy sources at 28.81%.

The PUCSL then announced a public consultation process to obtain stakeholder and public views on the proposed tariff revision before reaching its final decision on electricity tariffs for the quarter.

The final electricity tariff decision for the October–December 2026 quarter was expected by the PUCSL following the completion of its review and public consultation process.