The belief that the provision of electricity in rural areas can bring about desired socio-economic changes (increased economic opportunities, improved health and education facilities) has been challenged on two related counts. First, it is argued that electrification only brings changes to resourcerich households, and second, that it drains the resource-scarce rural economy. However, changes witnessed over the years in electrified areas in rural western Nepal demonstrate some positive outcomes. In response to the availability of electricity, village people have found various productive uses for it. The activity portfolios adopted in the post-electrification phase are not simply dictated by basic needs, but are also crafted by new opportunities emerging from the introduction of electricity. However, in order for positive outcomes to be routinely realized, concerted efforts must be made and policies framed by the utilities and the government to render electrification conducive to livelihood diversification. To support improvement of people's welfare through livelihood diversification, it is critical that electricity utilization is not limited to lighting and basic domestic uses.