2023 Third Quarter Tarriff Review Decision for Electricity, Water and Natural Gas

The Public Utilities Regulatory Commission (PURC) has announced its decision on the quarterly adjustment of utility tariffs for the third quarter of 2023.

The review process, carried out in accordance with the Quarterly Tariff Review Mechanism and Guidelines, aims to ensure fair and sustainable pricing for electricity, water, and natural gas services in Ghana.

The tariff review for this quarter is driven by three primary objectives. Firstly, it aims to incorporate changes in key factors that influence the determination of utility tariffs, including the Ghana Cedi/US Dollar exchange rate, inflation, electricity generation mix, and the weighted average cost of natural gas (WACOG). By considering these variables, the PURC aims to maintain the real value of the cost of supplying utility services.

Secondly, the tariff review seeks to address the issue of cross subsidization between industrial and residential customers. The high electricity costs faced by industrial customers have been identified as a significant challenge affecting the competitiveness of Ghanaian businesses in the global market.

To support the growth and competitiveness of the industrial sector and contribute to Ghana’s industrialization drive, the PURC has approved a reduction in cross subsidization, which is expected to enhance opportunities for job creation.

Thirdly, the tariff review aims to ensure the financial viability of utilities while reducing the burden on consumers, particularly lifeline customers who are most vulnerable. By striking a balance between the sustainability of service providers and the affordability of services for consumers, the PURC seeks to create a sustainable and equitable pricing structure.

Following extensive deliberations and analysis, the Commission has made the following tariff decisions. There will be no increment or change in end-user electricity tariffs for lifeline customers, industrial customers, and non-residential customers, such as hairdressing salons, barber shops, chop bars, tailoring and dress-making shops, cold stores, and other small- and medium-scale businesses, effective from September 1, 2023.

However, there will be a 4.22% increase across the board in the average end-user electricity tariff for non-lifeline residential customers.

Regarding water tariffs, there will be no increase or change in tariff for lifeline customers, ensuring that essential water services remain affordable. For all other water customer groups, the Commission has approved a 1.18% increase in tariff, taking into account the need for financial viability of water service providers.

In determining the tariff decisions, the PURC considered various variables. The projected hydro-thermal generation mix for this quarter remains at 29.01% for hydro and 70.99% for thermal, consistent with the previous quarter’s decision.

The Weighted Average Ghana Cedi-US Dollar Exchange Rate of GHSI1.4929/US$1.0000 was applied, incorporating an exchange rate projection of GHS11.0087/US$1.0000 for the third quarter and an under-recovery of 0.4842/US$1.0000 from previous quarters.

Also, the PURC has projected an inflation rate of 10.49% which was used for this quarter, indicating a decrease from the 12.62% rate used in the second quarter.

The fuel recovery charge for gas-fired power plants was determined based on a projected Weighted Average Cost of Gas (WACOG) of USD8.1221/MMBtu, reflecting a 24.64% increase compared to the previous quarter.

The PURC expresses its gratitude to all stakeholders for their support in implementing the quarterly tariff reviews.

The Commission remains committed to monitoring the operations of service providers to ensure the delivery of quality services while safeguarding the interests of consumers and utility service providers.

By striking a balance between affordability and sustainability, the PURC aims to foster a conducive environment for the growth of Ghana’s utility sector and the overall economy.

SOURCE: Coverghana.com.gh