Editorial: PURC moderates tariff adjustment to consolidate economic gains

As the month draws to a close and we approach October, the Public Utilities Regulatory Commission (PURC) has announced that it will increase electricity tariffs by 1.14 percent effective October 1 while keeping water charges unchanged.

According to PURC, this modest adjustment reflects the impact of currency pressures, inflation and fuel costs on service providers – such as the cedi-dollar exchange rate, cost of natural gas and the generation mix between hydro and thermal sources.

The country has faced recurring challenges in its power sector, with a heavy reliance on thermal generation that makes tariffs sensitive to global fuel prices and currency depreciation.

The cedi has weakened sharply in recent months, trading at an interbank average of GH¢10.7 to the U.S. dollar during the third quarter with the regulator projecting an exchange rate of GH¢11.97 for the year’s final quarter.

“This adjustment is necessary to maintain the financial viability of utility service providers and ensure they can continue delivering reliable services to consumers,” PURC  maintained in a release to the public.

The Commission said it used an annual average inflation rate of 12.43 percent in its calculations and approved a weighted average gas cost of US$7.71 per Million British Thermal Units (MMBtu).

Hydro sources contribute about 29 percent of the generation mix, with thermal plants making up the balance. Utility service providers at a recent PURC public hearing recognised the burden tariff adjustments place on consumers, but they noted that it is crucial to prevent disruptions in electricity supply and support ongoing improvements in service delivery.

The impending major tariff review under the Multi-Year Tariff Order (MYTO) to be announced before end of the year could have moderated the PURC’s original tariff stance and we believe consumers on the whole will find the adjustment manageable.

However, this does not absolve the Commission from responsiblity to ensure reliable and uninteruppted supply as its mandate stipulates. Consumers comply with tariff adjustments and the regulator must also be seen up and doing.

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