The Public Utilities Regulatory Commission (PURC) has implemented a 4.22 percent increase in electricity tariffs for all non-lifeline residential customers, affecting the average end-user.
According to the Commission, its decision comes after a review carried out for the third quarter of 2023. It revealed that its decision was equally guided by the ultimate interest of customers, the financial viability of the utilities and the general economic conditions prevailing in the economy.
PURC noted that after extensive deliberation and analysis, it has approved a no increment or change in end-user electricity tariff for lifeline customers, industrial customers and non-residential customers such as hairdressing salons, barbering shops, chop bars, tailoring and dress-making shops, cold stores and other small and medium-scale businesses, effective September 1, 2023.
“The Commission however, approved a 4.22% increase across board in the average end-user electricity tariff for non-lifeline residential customers. For the average end-use tariff for water, lifeline customers will experience no increase or change in tariff. The Commission however approved a 1.18% increase in tariff for all other water customer groups.”Public Utilities Regulatory Commission
Justifying its stance, PURC explained that the reasons for the tariff review, among other things, is to track and incorporate changes in key factors used in determining electricity, water and gas tariffs. It stated that the factors include the cedi/dollar exchange rate, inflation, electricity generation mix and the weight average cost of natural gas.
Additionally, PURC stated that the review is also to reduce cross subsidization between industrial and residential customers. This, it explained, is to address the high electricity cost for industrial customers which has been repeatedly identified in the AGI Business Barometer as a key challenge affecting competitiveness of Ghanaian businesses in the global marketplace.
“Thus, this reduction will support the growth and competitiveness of the industry, and as part of significant contribution towards Ghana’s industrialization drive and enhance business opportunities for job creation.”Public Utilities Regulatory Commission
Variables influencing determination of tariffs review
Furthermore, PURC expressed that the review is influenced by the need to ensure utilities are financially viable to sustain supply of service, while reducing the burden on consumers, especially lifeline customers.
Touching on the variables considered in the determination of the third quarter tariffs decision, PURC highlighted that the projected hydro-thermal generation mix was maintained at 29.01% for hydro, and 70.99% for thermal which was used in the 2023 second quarter tariff decision.
Also, it indicated that a weight average of the cedi/dollar exchange rate of GHS11.4929/$1.0000 was applied for the third quarter of 2023. Additionally, it stated that a projected inflation rate of 10.49% was used for this quarter in comparison with 12.62% used for the second quarter of 2023. This, it explained, indicates an average projected inflation rate variance of -2.13% from the previous quarters.
Moreover, the PURC stated that a projected weight average cost of gas of USDB8.1221/MMBtu was used to determine the fuel recovery charge for the various gas fired power plants for this quarter. Compared with the second quarter WACOG of USD6.5165, there was a 24.64% increase in the weighted average cost of gas.
Meanwhile, the PURC expressed gratitude to all stakeholders for their support as it continues to implement quarterly tariff reviews in accordance with its Rate Setting Guidelines for Quarterly Review of Natural Gas, Electricity, and Water Tariffs.
“The Commission wishes to assure its stakeholders that it will continue to monitor the operations of the service providers to ensure quality delivery of service, while balancing the interests of Consumers and Utility Service Providers.”Public Utilities Regulatory Commission