The Impact of 2022 Electricity Tariff Increases on Household Electricity Consumption: An Econometric Analysis of Kalmunai Municipal Council

Electricity tariffs aim to promote efficiency, equity, and financial stability. Ceylon Electricity Board increased the tariffs after making losses in 2022. The research is meant to establish whether there is any correlation between electricity tariffs and consumption. Data were collected over three years, from 2022 to 2024, using 101 households in each year. The same number of households were observed in each year, totaling 303 samples (101 households × 3 years). This research examines any changes in households' electricity consumption using the data collected over these three years. Random Effects regression analysis model has been used to analyze the data collected using Stata software. According to the results of the analysis, electricity consumption is associated with electricity tariffs and electricity expenditure. From the data collected, it is clear that there is a correlation between household electricity consumption and electricity tariff, income, and number of appliances. There is a positive correlation between electricity tariff and consumption. This is contrary to expectations but can be attributed to economic performance in the post-COVID era, increases in income levels, and use of appliances during the sample period. However, the application of modern technology, like solar panels, shows an inverse relationship with the use of electricity. This research recommends that the government and private sectors consider proper planning, both in the short and long term, to tackle this problem. Proposed measures include providing subsidies and incentives to encourage the adoption of renewable energy resources and implementing programs that reward consumers for using more electricity during off-peak hours.