The Public Utility Regulatory Commission (PURC) has increased electricity tariff by 59.2 % and water tariff by 67.2% for residential consumers, citing massive change in generation mix.
The new tariffs take effect from Monday, December 14, 2015.
Hydroelectric power, which costs 2.5 cents per kilowatt hour to generate, contributes only 27% of generation while thermal power, which costs 12 cents to generate one kilowatt hour, now contributes 73%.
Nana Yaa Jantuah, Director of Public Relations and External Affairs of PURC, said the significant change and increasing dependency on thermal generation has greatly impacted on the cost of electricity generation.
According to her, the factors that influenced the fuel price hike are consumer interest, investor interest, economic development of the country, generation mix, fuel mix, availability of the service, growth in demand, power purchase cost (IPP), cedi-to-dollar exchange rate and revenue requirements (to ensure financial viability of the utility service providers).
“For water utilities, the adjustment in tariff is driven by Chemical Cost in addition to the Power Purchase Cost and Operation and Maintenance Cost for the Ghana Water Company,” she said.
The PURC admitted that the increments were also necessitated by proposals it received in the middle of 2015 from utility service providers asking for an upward adjustment in tariffs.
The Volta River Authority (VRA), Ghana Grid Company Ltd (GRIDco), Electricity Company of Ghana (ECG), and Northern Electricity Distribution Company (NEDco) had requested 128.6% increment while the Ghana Water Company asked for 400.2% increment.
“As mandated by law and the commission’s decision-making process, extensive stakeholder consultations were held to solicit views and gather inputs for the final determination of adjustment in tariffs. Subsequent to a careful investigation of the proposals submitted by the utility service providers and in considering the inputs of, and concerns of consumers and key stakeholders who were consulted, the commission has approved utility tariff increases for various customer categories,” the statement said.
The commission said, in arriving at a decision, it also took into consideration the social impact a full cost recovery would have on certain categories of consumers who need to be supported.
She also pointed out that tariffs alone cannot raise the needed capital for the utility service providers to operate effectively.
“In this regard, the commission is urging government to continue sourcing funds to supplement the tariff income for infrastructural purposes,” she added.
Source: The Finder