Utility rates will rise starting on February 1st, 2023, a statement by PURC.
Despite acknowledging the current economic issues, the Public Utilities Regulatory Commission (PURC) made this announcement on January 16, 2023.
“The PURC is equally mindful of the current difficult economic circumstances but notes that the potential for outages would be catastrophic for Ghana and has to be avoided. The PURC, therefore, sought to balance prevention of extended power outages and its deleterious implications on jobs and livelihoods with minimizing the impact of rate increases on consumers”.
“The Commission, therefore, decided to increase the average end-user tariff for electricity by 29.96% across the board for all consumer groups (Table i). The average end-user tariff for water has also been increased by 8.3% (Table 2). The Commission, however, approved varying rate adjustments including some reductions for selected industrial and commercial consumers as part of the ongoing restructuring of the existing water rate structure”, the statement added.
The Commission took into account four important elements before making its conclusion about the end-user power rates that customers must pay.
A weighted average price for natural gas, inflation, generation mix, and the Ghana Cedi/US Dollar exchange rate were all taken into consideration.
“Since the announcement of the major tariff in August 2022, these key variables underlying the rate setting have changed significantly. For example, the weighted average Ghana Cedi/Dollar exchange rate used for the major tariff review was GHS 7.5165 to the US Dollar. Since then, we have witnessed the depreciation of life Cedi against the US Dollar and other major currencies. The projected weighted average Ghana Cedi US Dollar exchange rate used in First Quarter 2023 Tariff Analysis is GHS10.5421/USD”, PURC added.
Additionally, there has been a fourfold increase in the weighted average inflation number used for the primary tariff.
This has made it more difficult for the utilities to obtain the essential inputs needed for their operations, together with changes in exchange rates.
In its estimate of tariffs for the first quarter of 2023, the Commission utilized a forecast inflation rate of 42.63%.
“The combined effect of the Cedi/US Dollar exchange rate, inflation and WACOG is that the utility companies are significantly under-recovering and require an upward adjustment of their tariffs in order to keep the lights on and water flowing”, the statement added.