The Public Utilities Regulatory Commission (PURC) has announced a 14.75% increase in the average end-user electricity tariff and a 4.02% rise in water tariffs for all consumer categories, effective in the second quarter of 2025.
The tariff adjustments are part of the Commission’s quarterly review process aimed at ensuring the financial viability of utility providers while cushioning consumers from extreme hikes.
In a press statement issued by the Commission, the regulatory body explained that the adjustments followed the completion of its quarterly tariff review mechanism as outlined in the PURC Rate Setting Guidelines.
The mechanism tracks and adjusts for fluctuations in four critical variables: the Cedi to US Dollar exchange rate, inflation, the electricity generation mix, and fuel costs—primarily natural gas.
“The Commission, in their decision, reviewed upward the average end-user tariff for electricity by 14.75% and also 4.02% upward for water supply across the board for all categories of consumers.”
Public Utilities Regulatory Commission (PURC)
The PURC cited significant under-recoveries from previous tariff cycles as a key driver behind the latest hike.
A major component influencing the increase is the necessity to recover GHS 976 million in outstanding revenue, carried over from the previous three quarters of 2024.
To ease the burden on consumers, the Commission decided to spread the recovery over two quarters—recouping 50% in Q2 2025, with the remainder to be spread across subsequent reviews.
“A total payment of the outstanding revenues from the previous quarters would have resulted in much higher increase in both electricity and water tariffs.
“Being mindful of the current economic difficulties for Ghanaians, the PURC decided to recover only half of the outstanding debts.”
Public Utilities Regulatory Commission (PURC)
Economic Variables at Play
According to the Commission, the tariff review incorporated a Weighted Average Exchange Rate of GHS15.6974 to the US Dollar, which marked an under-recovery of GHS0.17 compared to the previous review in late 2024.
Additionally, a projected inflation rate of 22.49% for the second quarter was factored into the computation.
Fuel costs were also a determining factor. The applicable Weighted Average Cost of Gas (WACOG) for Q2 2025 is USD 7.6289/MMBtu, slightly lower than the USD 7.8368/MMBtu used in the third quarter of 2024.
This drop in fuel cost, however, was insufficient to offset the broader inflationary and exchange rate pressures.
The generation mix further influenced the pricing model, with hydro sources accounting for 28.80% and thermal generation contributing 71.20%.
Since thermal sources are generally more expensive, the reliance on them for over two-thirds of electricity generation contributed to the upward pressure on tariffs.
The PURC emphasized that the quarterly review process is designed to avoid both over-recovery, which can burden consumers, and under-recovery, which can cripple utility providers.
“Under-recovery has negative implications for the ability of the companies to supply electricity and water to consumers and it has the potential to cause outages.
“Over-recovery, on the other hand, unnecessarily overburdens consumers.”
Public Utilities Regulatory Commission (PURC)
By adjusting tariffs incrementally and regularly, the PURC aims to maintain the real value of utility tariffs while ensuring service continuity.
The PURC’s decision to adjust electricity and water tariffs underscores the complex interplay between economic realities and the need for sustainable utility services.
This development serves as a reminder of the critical role regulatory bodies play in balancing the interests of stakeholders in essential service provision.
The Commission has promised to maintain its balancing approach, considering both the needs of utility companies and the economic realities of consumers.
For now, Ghanaians will have to brace for slightly higher utility bills, with the hope that improved revenue streams will lead to more reliable service delivery in return.
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