Twenty percent of Zimbabwe's urban poor households are still to be connected to the grid. The majority of these households are poor. There are several reasons why the Zimbabwe urban poor are still not connected to the grid, the most important one being the household incomes and the cost of different sources of energy. In order to facilitate wider Usage of electricity by the poor, the policy makers have introduced a subsidy policy.The objective of this paper is to ascertain the extent to which the poor urban households could afford the cost of electricity with or without subsidies. This gives an indication oil whether contrary to the current thinking, subsidies are decisive for the affordability of electricity by the urban households. The paper also examines the distribution of the subsidies, amongst the different urban household income categories and other economic sectors. Furthermore the impact Of Such subsidies on the utility's finances is assessed. (C) 2002 Elsevier Ltd. All rights reserved.