The Public Utilities Regulatory Commission (PURC) has expressed its resolve to increase utility tariffs in the country on September 1.
According to the Commission, in balancing the interests of service providers and consumers, it acknowledged that the very economic variables that have occasioned the steep increases proposed by the service providers also affect consumers. Nonetheless, it indicated that “some level of increases in utility tariffs were inevitable” if the nation was to avoid another power crisis and its attendant effects, including job losses.
“The Commission therefore decided to increase the average end-user tariff for electricity by 27.15% and water by 21.55% effective 1st September, 2022. These rates, in view of the Commission, are sensitive and responsive to the positions of all stakeholders in the utility space in line with sections 3(c) of PURC Act 1997 (Act 538).”
PURC
Contained in a statement signed by the Executive Secretary of PURC, Ishmael Ackah, it noted that the tariff decisions for the period 2022-2025 have been informed by rigorous analyses, intense debates, and extensive consultations. The last major review of tariffs, the Commission highlighted was done in 2018 which resulted in a 17.5% reduction for residential and 30% for non-residential in electricity tariff.
Since then, PURC expressed that key “macroeconomic variables have deteriorated”, particularly since 2020. These, it stated, have adverse implications on the ability of utilities to keep the lights on and water flowing.
Touching on its conclusion on the regulatory process for the examination and approval of utility tariffs covering the period 2022 to 2025, it explained that has been the practice as it undertook extensive stakeholder consultations, which afforded the utility service providers the opportunity to explain their proposals to the general public and key interest groups such as the Association of Ghana Industries (AGI) and the Trades Union Congress (TUC).
Utility companies requested astronomical increases
PURC highlighted that the companies requested for “very astronomical increases”, with GWCL demanding over 300% increase in end-user tariffs and ECG and NEDCo proposing 148% and 113% increases respectively.
“VRA and GRIDCo proposed 37% and 48% increment respectively. After receiving these proposals, the Commission carried out rigorous regulatory audit of processes and assets of Utility Service Providers, enabling it to adjust the Weighted Average Cost of Gas (WACOG) for power generation and end-user tariffs for electricity and water.”
PURC
For the end-user electricity tariffs/rates payable by consumers ,the Commission emphasized that it considered a number of factors which include the cost of power which is influenced by growth in demand, Weighted Average Cost of Gas (WACOG), inflation and the Ghana Cedi/US Dollar.
Most importantly, the Commission, expressed that it was guided in its decision by the supreme interests of consumers and the general economic conditions prevailing in the country.
“The Commission gave considerable thought to the role of small and medium scale enterprises in the country’s economic development, in particular, the creation and/or preservation of jobs and livelihoods…”
PURC
The Commission highlighted that existing tariff is structured in a manner that “slaps industry with punitive tariffs” in order to subsidize residential consumers of electricity. This structure, it explained, has contributed to loss of competitiveness of Ghanaian industry including small and medium size household enterprises.
The PURC expressed gratitude to all stakeholders for their participation and inputs into the tariff approval process. It further pledged to continue to monitor the operations of the Utility Service Providers to ensure value for money and quality of service delivery.
“After this major Tariff Review, the Commission will implement its Quarterly Tariff Review in line with its Rate Setting Guidelines for Quarterly Review of Natural Gas, Electricity and Water Tariffs.”
PURC
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