Electricity and Water Tariffs Set to Jump: PURC Approves 4.22% and 1.18% Increase for Q3 2023
By: Isaac Boamah Darko
Accra, Ghana – The Public Utilities Regulatory Commission (PURC) has announced its decision on the quarterly adjustment of utility tariffs for the third quarter of 2023. This decision is in line with the Quarterly Tariff Review Mechanism and Guidelines outlined in the Commission’s major tariff review decision from August 2022.
The objectives of this quarter’s tariff review are threefold. Firstly, it aims to incorporate changes in key factors used to determine electricity, water, and natural gas tariffs, such as the Ghana Cedi/US Dollar exchange rate, inflation, electricity generation mix, and the weighted average cost of natural gas (WACOG). This is crucial to maintain the real value of the cost of supplying utility services.
Secondly, the tariff review aims to address the high electricity cost for industrial customers, as identified in the AGI Business Barometer. By reducing cross-subsidization between industrial and residential customers, the Commission hopes to enhance the competitiveness of Ghanaian businesses in the global marketplace, support industrial growth, and create more job opportunities.
Lastly, the tariff review aims to ensure the financial viability of utilities while reducing the burden on consumers, especially lifeline customers.
After extensive deliberations and analysis, the Commission has approved a 0% increase or change in end-user electricity tariffs for lifeline customers, industrial customers, and non-residential customers, including small- and medium-scale businesses, effective from September 1, 2023. However, there will be a 4.22% increase in the average end-user electricity tariff for non-lifeline residential customers.
In terms of water tariffs, lifeline customers will experience no increase or change (0%), while all other water customer groups will see a 1.18% increase in tariffs.
The Commission’s decisions were guided by the interests of consumers, the financial viability of utilities, and the prevailing economic conditions in the country.
Several variables were considered in determining the third quarter tariff decision. The projected hydro-thermal generation mix remained at 29.01% for hydro and 70.99% for thermal. The weighted average Ghana Cedi-US Dollar exchange rate of GHS1.4929/US$1.0000 was applied, including an exchange rate projection of GHS1.0087/US$1.0000 for the third quarter. The projected inflation rate for this quarter was 10.49%, compared to 12.62% in the second quarter. Additionally, the weighted average cost of gas (WACOG) increased by 24.64% to USD8.1221/MMBtu.
The PURC expresses gratitude to all stakeholders for their support and assures them that it will continue to monitor the operations of service providers to ensure quality delivery while balancing the interests of consumers and utility service providers.