The Centre for Environmental Management and Sustainable Energy (CEMSE) is calling for a significant Ghana electricity tariff reduction of about 11 percent in the first quarter of 2026, arguing that improved macroeconomic conditions and earlier over-recoveries make a downward adjustment both necessary and unavoidable.
In a policy review, the think tank said current economic indicators show a clear decline in key cost drivers used by the Public Utilities Regulatory Commission (PURC) to set tariffs, and warned that failure to reduce rates would undermine regulatory credibility and public trust.
CEMSE noted that the economic context entering 2026 is markedly different from the assumptions used to justify the fourth-quarter tariff increase in 2025.
“The context for the First Quarter of 2026 makes the case for correction even more compelling,” the review stated. It explained that the Ghana cedi is currently trading at about Ghc10.99 to the US dollar, representing a 6.35 percent appreciation compared to the Ghc11.735 rate used in the previous tariff model.
Inflation trends have also shifted significantly downward. The projected average inflation for the first quarter of 2026 is 3.4 percent, a sharp decline from both the earlier projection and the actual inflation recorded in the previous quarter.
According to CEMSE, the consistent downward movement in these key uncontrollable variables means maintaining current tariff levels would be inconsistent with the logic of the quarterly adjustment framework.
Zero Adjustment Would Be Regulatory Failure
The policy review cautioned against maintaining a zero percent tariff change, a measure previously applied to water tariffs in late 2025.
“To simply apply a zero percent increase for Q1 2026 would constitute regulatory failure,” the report said, arguing that such a decision would ignore the inflated baseline created by earlier over-recovery.
The organization emphasized that current electricity rates are already built on cost assumptions that overstated actual economic conditions. As a result, freezing tariffs rather than reducing them would effectively lock in an unjustified pricing structure for consumers.
“It would ignore the fact that the baseline from which we are starting is itself artificially and significantly inflated,” the review added.
CEMSE is proposing a two-stage approach to restore fairness and align tariffs with actual costs.
First, the regulator should formally recognize and quantify the over-recovery from the fourth quarter of 2025. The report described this amount as a “consumer credit” that must be applied to offset cost requirements for the new quarter.
Second, the new tariff should be calculated using updated macroeconomic parameters, including the lower exchange rate of Ghc10.99 per dollar and the modest inflation projection of 3.4 percent.
“The combination of these steps, reversing the past overcharge and applying current, lower-cost parameters, will inevitably result in a double-digit percentage decrease in electricity tariffs of about 11 percent.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
The think tank stressed that the recommendation is not a political or populist intervention but the outcome of properly applying the regulator’s own cost pass-through methodology.
“This is not a request for a subsidy; it is the mechanical and righteous outcome of applying the formula accurately and honestly.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
Risks to Public Trust and Economic Recovery
Beyond the technical analysis, CEMSE warned that failing to implement a meaningful reduction could damage the credibility of the quarterly tariff review system.
According to the report, the mechanism risks being perceived as a one-directional tool that quickly transfers projected cost increases to consumers but fails to return excess payments when economic conditions improve.
“Failure to enact a meaningful tariff reduction fundamentally corrupts the social contract underpinning the quarterly review system.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
The review also highlighted broader economic implications. Keeping tariffs elevated despite falling cost pressures would reduce disposable income for households and increase operating costs for businesses, potentially slowing economic recovery.
“Such an outcome would erode public trust, undermine the PURC’s legitimacy, and place an unnecessary drag on economic recovery,” the report noted, adding that the arithmetic behind the proposed reduction is straightforward and grounded in verifiable economic trends.
The think tank said the regulator must now demonstrate its commitment to balanced, evidence-based oversight by announcing a substantial electricity tariff cut for the first quarter of 2026.
According to CEMSE, doing so would reaffirm that the commission’s primary responsibility is to ensure fairness between utilities and consumers, rather than simply sustaining revenue flows for the power sector.
