Insensitive PURC Increases Tariff Again
Despite the unending economic hardship being experienced, the Public Utilities Regulatory Commission (PURC) has for three consecutive times gleefully increased electricity tariff, with the latest announced yesterday, May 17, 2023.
In its second quarter review, the commission says electricity and natural gas will be up by 18.36 percent effective June 1, without taking into consideration the relative stability of the cedi against the dollar and the gradual decline of inflation.
This comes after the regulator increased water and electricity tariffs in September 2022 by 21.55 percent and January 2023, by 29.96 percent, as part of its quarterly tariff review adjustment mechanism introduced last year.
But the incessant increments have angered many consumers who have called out the PURC, questioning the modalities.
According to some consumers of power, it is irritating and annoying for the PURC to be only increasing tariffs when its own mechanisms that warrant the increments are coming down.
They complained bitter about the poor service of the Electricity Company of Ghana (EGC), which is not being considered in this whole review.
The peeved customers said, if for nothing at all, the commission should have ensured that the tariff, especially for electricity, stayed at the last review since the cedi and inflation appear to be stable, coupled with the current erratic power outages, notoriously known as “dumsor.”
Recall that while rolling out this review mechanism last year, the PURC had indicated that it was going to increase or reduce tariffs depending on how the exchange rate, inflation and electricity generation mix among others fared.
The cedi has advanced 33 percent since November, last year, the biggest gain among about 150 currencies tracked according to Bloomberg, becoming the world’s best performer against the dollar over the past six months.
But despite the cedi’s relative stability from 17 last year to 10.99 to the dollar and inflation coming down from 54.1 in December to 41.2 the end of April, electricity tariff is still being reviewed upwards without taking into considering these developments.
The PURC, in a statement, explained that the decision was taken to balance the prevention of extended power outages and their adverse implications on jobs and livelihoods, while minimizing the impact of rate increases on consumers.
The Quarterly Tariff Review Mechanism seeks to track and incorporate changes in key factors used in determining natural gas and electricity tariffs.
The PURC identified several factors as contributors to the latest tariff adjustment, including the fluctuating Ghana Cedis/US Dollar exchange rate, inflation, the composition of electricity generation sources, and the weighted average cost of natural gas (WACOG).
In clarifying the need for the latest review, the commission emphasized the importance of maintaining the true value of the cost of utility services and ensuring that utility companies neither overcharge nor undercharge consumers.
It said failure to adequately recover costs can have adverse consequences on the company’s ability to provide reliable services, potentially leading to electricity outages. Conversely, excessive cost recovery places an unnecessary burden on electricity consumers.
“This review has become necessary to maintain the real value of the cost of supply of the utility services and to ensure that the utility companies do not under or over-recover costs.
“While under-recovery has negative implications for the ability of the companies to supply service to consumers, and has the potential of causing outages of electricity, over-recovery unnecessarily overburdens consumers of electricity,” the statement said.