PURC Increases Water and Electricity Tariffs Effective February 1

The Public Utilities and Regulatory Commission (PURC) has increased electricity and water tariffs by 29.96% and 8.3%, respectively.

The new rates are set to take effect from February 1, 2023.

This follows the conclusion of its regulatory process for the quarterly adjustment of utility tariffs covering the first quarter of 2023.

PURC said the process conforms with the Quarterly Tariff Review Mechanism and Guidelines as communicated in the Commission’s August 2022 major tariff review decision.

This was announced by the Public Utilities Regulatory Commission (PURC) on Monday, January 16, 2023, as they enumerated some challenges faced by the firm.

“The PURC is equally mindful of the current difficult economic circumstances but notes that the potential for outages would be catastrophic for Ghana and has to be avoided. Therefore, the PURC sought to balance prevention of extended power outages and its deleterious implications on jobs and livelihoods with minimizing the impact of rate increases on consumers”.

“The Commission, therefore, decided to increase the average end-user tariff for electricity by 29.96% across the board for all consumer groups (Table i). The average end-user tariff for water has also been increased by 8.3% (Table 2). The Commission, however, approved varying rate adjustments, including some reductions for selected industrial and commercial consumers as part of the ongoing restructuring of the existing water rate structure”, the statement added.

For the end-user electricity tariffs consumers pay, the Commission considered four key factors in arriving at its decision.

These were the Ghana Cedi/US Dollar exchange rate, inflation, generation mix and the weighted average cost of natural gas.

“Since the announcement of the major tariff in August 2022, these key variables underlying the rate setting have changed significantly. For example, the weighted average Ghana Cedi/Dollar exchange rate used for the major tariff review was GHS 7.5165 to the US Dollar. Since then, we have witnessed the depreciation of life Cedi against the US Dollar and other major currencies. The projected weighted average Ghana Cedi US Dollar exchange rate used in First Quarter 2023 Tariff Analysis is GHS10.5421/USD”, PURC stressed.

Additionally, the weighted average inflation figure used for the major tariff has increased four-fold.

Together with exchange rate movements, PURC said it has negatively affected their ability to purchase critical inputs required for their operations.

The Commission used a projected inflation rate of 42.63% in its tariff analysis for the First Quarter of 2023.