The adminstration says mines are paying lower prices at the expense of the poor.
(READ MORE: Lack of policy clarity hampers investment into Zambia mining)
"ZESCO is a people's company and it must work for the people," Lungu said in a statement. "We agree with you that there is no equity in charging domestic consumers more than you are charging commercial consumers."
ZESCO did not say how much it plans to increase prices by over the next two years in Africa's second-biggest copper producer. The tariff freeze for consumers would also be in place for two years.
Lungu pledge to fight poverty helped him win a presidential election last month, which was triggered by the death in office of Michael Sata.
(READ MORE: Zambian president directs government to resolve mining tax rows)
A new policy, developed under Sata, to scrap corporate income tax and hike mining royalties has shaken confidence in the industry already grappling with a plunge in the price of copper.