A new policy review by the Centre for Environmental Management and Sustainable Energy (CEMSE) has revealed a major Ghana electricity tariff overcharge, estimating that consumers paid about Ghc1.5 billion more than actual utility costs in the fourth quarter of 2025.
The analysis attributes the excess charges to overly pessimistic economic assumptions used by the Public Utilities Regulatory Commission (PURC) in setting electricity tariffs.
Applying the exchange rate gap to total electricity consumption of approximately 6,459 gigawatt-hours (GWh) for the quarter, and assuming that 60 percent of generation costs were dollar-denominated, CEMSE concluded that consumers bore a significant financial burden.
“The calculation revealed that consumers paid about Ghc1.5 billion in costs that utilities never incurred based on the real exchange rate.
“This is not a theoretical adjustment but a quantifiable overpayment extracted from the country’s economy.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
The report further noted that earlier over-recoveries from the first and second quarters of 2025, estimated at about 30 percent, were not passed through to consumers in the third quarter, compounding the effect.
“The PURC’s decision to increase electricity tariffs by 1.14% for Q4 2025 was predicated on specific, and as it turned out, profoundly pessimistic economic assumptions.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
Exchange Rate Assumptions at the Core
At the heart of the tariff adjustment was the projected Ghana cedi to US dollar exchange rate of Ghc11.9735/USD. This was further adjusted to an effective rate of Ghc12.3715/USD to account for what PURC described as under-recovery from the previous quarter.
CEMSE noted that this exchange rate assumption became the cornerstone of the tariff hike, given that a substantial portion of utility costs, including fuel procurement and debt servicing, are denominated in US dollars.
However, the actual average exchange rate recorded for the entire fourth quarter of 2025 stood at Ghc10.8733/USD, creating a wide gap between projected and real market conditions.
“This discrepancy is not a minor forecasting error; it represents a dramatic overestimation of the cost pressure,” the review emphasised, calculating an over-recovery per dollar of Ghc1.1002.
Beyond the exchange rate assumptions, CEMSE also challenged the inflation projection used in the Q4 tariff model. PURC applied an annual inflation rate of 12.43 percent, aimed at preserving the real value of revenue for utilities.
Yet the actual average inflation recorded during the quarter was 6.6 percent, roughly half of the projected figure. “This means that the tariff increase built a buffer against price erosion that almost doubled its previous value,” the review observed.
On two of the three major external cost drivers, exchange rate and inflation, the tariff was therefore calibrated using assumptions that significantly overstated prevailing economic conditions.
“Consumers have, in effect, been subsidizing utility finances against a phantom cost scenario for the past three months.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
Tariff Hikes Fail to Boost ECG Revenue
While tariffs have risen, the review also found that the increases have not translated into sustained improvements in revenue mobilisation for the Electricity Company of Ghana (ECG).
Citing findings from the Cash Waterfall Validation Report, CEMSE noted that ECG’s revenue in April 2025, before the implementation of the first and second quarter upward adjustments of 14.75 percent, stood at approximately Ghc1.4 billion.
After the May 3, 2025 adjustment, revenue recorded for May declined to about Ghc1.3 billion, a drop of roughly 7 percent compared to April. Although collections improved to around Ghc1.6 billion in June, representing a 14.29 percent increase over April, the gains proved short-lived.
By August 2025, revenue had fallen again to about Ghc1.3 billion, similar to May levels, despite another upward adjustment of 2.45 percent implemented in July as part of the third quarter review.
“Despite these successive increases, the average revenue inflows following the adjustments have remained largely unchanged from the period before the tariff hikes.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
Growing Collection Challenges
The findings suggest that tariff increases alone may not address underlying inefficiencies within ECG’s revenue mobilisation systems. According to CEMSE, revenue performance appears to have deteriorated following multiple tariff adjustments, pointing to potential growth in uncollected bills and collection challenges.
“The findings from the Cash Waterfall Mechanism indicate that ECG’s revenue performance has deteriorated following the multiple tariff adjustments, pointing to a growing challenge in revenue collection and a possible rise in uncollected revenue.”
Centre for Environmental Management and Sustainable Energy (CEMSE)
The CEMSE analysis raises broader questions about the methodology underpinning quarterly tariff adjustments and the balance between protecting utility finances and safeguarding consumer welfare.
If exchange rate and inflation projections consistently overshoot actual outcomes, consumers may bear avoidable costs, especially during periods of macroeconomic stabilisation.
As debates over energy sector reform continue, the findings are likely to intensify scrutiny of PURC’s modelling assumptions and ECG’s revenue collection performance, particularly at a time when affordability and efficiency remain central to Ghana’s power sector sustainability.
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