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UTILITY TARIFFS ARE EXPECTED TO GO UP EFFECTIVE SEPTEMBER 1, THIS YEAR.



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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