This paper uses a computable general equilibrium (CGE) macro–micro model to explore the distributional effects of price reform in the electricity sector of Senegal. In the first part of the paper we analyse the distribution of electricity in Senegal by income quintiles, between 1995 and 2001. The analysis demonstrates that poor and rural households are not the main beneficiaries of the expanded network. The results of the CGE model show that direct price effects are weaker than general equilibrium effects on poverty and inequality. Moreover, compensatory policies tested can help attenuate some adverse effects.