The Institute for Energy Security (IES) has questioned the uses of variables by the Public Utility and Regulatory Commission (PURC) in establishing the new electricity tariffs which is set to commence from February 1, 2023.
According to the Institute, the key variables used which include, the rates for cedi/dollar, exchange rate and inflation rates reflects market conditions. However, the IES reckoned the assumption used by the PURC on the electricity generation mix of 26.11% hydro-thermal and 73.89% thermal are baseless.
The Institute noted that the assumption amounts to “given priority to thermal power generation over hydro, given that water elevations for Bui and Akosombo generating stations (GS) have improved, and capable of producing close to 38% of power in 2023”.
“Although the IES has anticipated that the average electricity end-user tariff (GH₵/kWh) covering residential, non-residential and special load tariff electricity consumers would see an increase within the year, the expected increase in tariff was anticipated to be marginal should more of hydro-electric power be produce from the generation mix”.
Institute for Energy Security
The energy think tank expressed the need for PURC to reconsider the energy mix assumption used in the tariff adjustment to reflect improved water-head levels as that has an impact on the Weighted Average Cost of Gas, which has been reviewed to $6.0952/MMBtu from $5.9060MMBtu.
IES indicated that this will bring down the 29.96% tariff increase for all electricity consumer groups, thus introducing some relief to the already burdened citizens, in the face of the current economic crisis.
“Should the PURC decide to maintain the 26.11% hydro-thermal and 73.89% thermal electricity generation mix for 2023 as the basis for the high tariff increment, that position would amount to promoting inefficiency and deliberately burdening the Ghanaian with high electricity cost.”
Institute for Energy Security
Akosombo, Bui in better positions to produce electricity
Commenting on the generation of electricity by Akosombo and Bui dam, IES noted that data from the two indicate elevations at the beginning of 2023 compared to previous years and are in a better position to produce more electricity than the thermals. It therefore agreed with the expectation that bulk of the capacity generation for 2023 would come from thermal sources if natural gas supply is sustained, and planned plant maintenance schedules is strictly adhered to.
“Bui’s water elevation is expected to help produce more megawatts to meet increasing electricity demand at particularly peak hours and extended mega Vars to support voltage on the grid and help reduce transmission losses, if dispatched conservatively throughout the year.”
Institute for Energy Security
IES highlighted that with improved water-head levels, hydropower generation is estimated to produce close to 38% of 2023 capacity, should hydro-electric have dispatched priority over thermal in the generation mix.
It will be recalled that the Public Utilities and Regulatory Commission increased electricity and water tariffs by 29.96% and 8.3% respectively, on January 16, 2022. The new rates take effect from February 1, 2023.
The Commission stated that the process is in conformity with the Quarterly Tariff Review Mechanism and Guidelines as communicated in the Commission’s August 2022 major tariff review decision.
Following the increment, some stakeholders have expressed their reservation about its impact on people and businesses.
The Chief Executive of the Ghana National Chamber of Commerce and Industry (GNCCI), Mark Badu Aboagye, has lamented the recent hike in utility prices. He revealed that the increment will “worsen the plight of businesses”.
He believes increasing utility tariffs as it stands now is not the best move as businesses are yet to recover from the impact of the economic hardships and difficulties of 2022.
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