Utility rates are set to rise next week for the first time since 2017. This comes after the Public Utilities Regulatory Commission (PURC) conducted nationwide consultations on utility company proposals. According to a source familiar with the stakeholder consultations, the PURC engaged identifiable groups and relevant sections of the public in addition to the public fora across the 16 regions and had considered all sides of the arguments in arriving at appropriate tariffs. The new tariffs will not be uniform, which means that the rates will be determined by the utilities' reasons and proofs, as well as the commission's verification. According to another source, the tariffs that will be announced do not include taxes.
In May of this year, the utility companies presented
proposals to the PURC based on the regulator's guidelines. While the Ghana
Water Company Limited (GWCL) proposed a 300% increase over its current tariffs,
the Electricity Company of Ghana (ECG) proposed a 148% increase, the Volta
River Authority (VRA) proposed a 37% increase, and the Ghana Grid Company Ltd
(GRIDCo) proposed a 48% increase. Other proposals included a 38% increase over
the Northern Electricity Distribution Company's existing tariffs from the only
private power distributor, Enclave Power, and a 113% increase over the Northern
Electricity Distribution Company's existing tariffs (NEDCo).
The tariff proposals were in line with policy
directives to gradually eliminate "punitive tariff bands" that
discouraged consumption. This included forcing industry to pay more to cushion
residential consumers, which increased the cost of doing business and made
industrial operations more expensive. The multi-year tariff adjustment is also
expected to enable the PURC and utilities to commit to the quarterly
"automatic" adjustment system, support industrial development, and
improve utility efficiency. Another source familiar with the consultations and
computations told the Daily Graphic that in arriving at The regulator
considered external and internal economic conditions, as well as the need to
keep utilities operational, allowing them to do routine maintenance and finance
developments, among other things, when determining the various tariffs.
The PURC also subjected all costs proposed by
utilities to rigorous assessment and validation, including site visits to some
of the investments. It accepted loan servicing costs for approved investments,
while state-owned utilities were asked to freeze all discretionary spending
this year. Among other things, the regulator requested and critically evaluated
proposed utility investments.
In addition, the PURC conducted a survey, with 851
respondents from all 16 regions completing the questionnaire. According to the
survey, 44% of respondents believed that current electricity tariffs were not
commensurate with the quality of service received from electricity utilities
due to frequent voltage fluctuations, poor customer service delivery, and other
factors. In terms of electricity tariffs, 42% of respondents thought they were
fair, while 55% thought they were high. Again, half of those polled said that
current water tariffs were unjustified, citing poor service delivery in the
form of frequent water supply outages. As a result, 41% of respondents thought
current water tariffs were fair, while 57% thought they were high.
According to the source, the PURC would also
establish efficiency benchmarks to which utilities would adhere so that
inefficiencies would not be passed on to customers. "The PURC establishes
loss benchmarks, most of which cover technical losses, to ensure that
inefficiencies are not passed on." The benchmark was 4.2%, and if you
incur 10%, the PURC will deduct the benchmark and the utility will pay the remainder,
it explained.
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