Laos Implements New Electricity Rates, Ends Free Power for Low-Usage Households

Government Announces Tariff Adjustments

The government of the Lao People's Democratic Republic has announced new electricity rates for households, effective from the October 2025 billing cycle, covering the final quarter of the year. The announcement, posted on Facebook by the Ministry of Industry and Commerce on September 23, 2025, includes the cessation of the free electricity program for low-usage households.

This latest adjustment will see the cost of electricity transmission for Tier 1 to Tier 3 households increase by 0.7 US cents per kilowatt-hour from September to December. The decision follows the introduction of a new tiered pricing system in February 2025, which was set to take effect through 2029 and had already led to significant increases in electricity costs across all household categories.

Impact on Household Bills

The termination of the free electricity program specifically affects households consuming up to 25 kilowatt-hours per month. These low-usage consumers had previously benefited from free power, and their bills have already seen substantial increases earlier in the year. For instance, the cost for households consuming 0-25 kWh per month jumped from 355 kip in January to 679 kip per kWh in July, representing a 91.27 percent increase.

Projections indicate that by 2029, households using 0-25 kWh per month could pay up to 911 kip per kWh, while those consuming over 1,500 kWh might face charges as high as 2,223 kip per kWh. The average household retail rate currently stands at approximately 3 cents (647 kip) per kWh, significantly lower than the average base tariff of 7.29 US cents (1,567 kip) per kWh.

Rationale Behind the Price Hikes

The state enterprise, Electricité du Laos (EDL), has attributed the necessity for higher rates to several factors. These include the substantial debt accumulated from investments in expanding services to remote areas, which are costly and yield low commercial returns. EDL has stated that the price hikes are essential to align with the actual costs of electricity distribution. Furthermore, the weakening national currency (kip) and surging domestic demand for electricity have also contributed to the financial pressures.

In response to these challenges, EDL announced its intention to continue negotiations with independent power producers to secure lower electricity purchase costs. The government also plans to modernize electricity metering and payment systems to enhance transparency and reduce billing errors, which have been a source of public complaints. The official announcement also emphasized the promotion of renewable energy sources, such as rooftop solar panels, wind power, and biomass, alongside public awareness campaigns for energy conservation.

Public Outcry and Government Response

The series of electricity price adjustments has generated considerable public dissatisfaction. The announcement on EDL's official Facebook page quickly garnered strong reactions, with many social media users expressing frustration over the rising costs. The dramatic increase in electricity bills has been a prominent topic of public complaints and was extensively debated during the 9th Ordinary Session of the National Assembly.

Lawmakers have urged the government to reconsider the changes, citing the economic strain on households already contending with high inflation and soaring living costs. In response, the government has reaffirmed its commitment to reviewing the tariff policy and easing the burden on consumers. Officials have indicated that subsidies for low-income households will continue. The cabinet has endorsed a plan to reopen talks with hydropower developers in the latter half of 2025, aiming to secure more affordable electricity rates.