Tariffs hike: Electricity – 27.15%, water – 21.55%

• Posted on August 17, 2022August 17, 2022
• by Nana Kwesi Coomson
• Comment

 Effective September 1, 2022, new water and electricity tariffs will kick in.

Electricity-21.55%, water-27.15% increases
Electricity tariff will go up 27.15% while water tariff will increase by 21.55%.

The Public Utility Regulatory Commission (PUCR) made the announcement following major tariff review for 2022-2025.?
Dr Ismael Ackah, the Executive Secretary of the Commission announced this at a media briefing in Accra yesterday.

Inefficiencies
The tariffs have been increased at a time that the utility companies keep posting heavy losses due to inefficiencies.

GWCL posts GH¢938.83m losses in 2020
The Ghana Water Company Limited (GWCL) posted a net loss of GH¢938.83 million for 2020.

 ECG records GH?13.1bn losses in 5 years
The total losses incurred by the Electricity Company of Ghana (ECG) between 2017 and 2021 amounted to GH?13.1 billion (GH?13,120,739,288.99).

GH?8.9bn system losses
System losses which is a combination of technical losses and commercial losses amounted GH?8.9 billion (GH?8,995,639,288.99).

GH?4.1bn collection losses
The company also recorded collection losses of GH?4.1 billion (GH?4,125,100,000).

Lifeline residential electricity consumers-41.90 pesewas per kWh
Per the increases, lifeline residential electricity consumers (0-30 kilowatt per hour) band will now pay 41.90 pesewas instead of the current 36.20 pesewas.?

89.04 pesewas-128.39 pesewas per kWh for all other residential consumers
All other residential consumers will pay a tariff between 89.04 pesewas per kWh hour and 128.39 pesewas per kWh.?

SMEs consuming 0-300kWh to 83.78 pesewas per kWh
For businesses, Small and Medium-sized enterprises (SMEs) consuming electricity of 0-300kWh will pay 83.78 per kWh.

SMEs consuming 300 to 600kWh to 89.15 to 133.09 pesewas per kWh
Similarly, SMEs consuming electricity between 300kWh to 600kWh and above will pay 89.15 to 133.09 pesewas.?

GH?12.4 monthly service charge for Non-Residential Consumers
For Non-Residential Consumers, they will be paying the same monthly service charge of GH?12.4.

GH?10.7 monthly service charge for all other residential customers
All other residential customers will now pay a monthly service charge of GH?10.7309 up from GH?7.4.

Residential consumers of water – GH?4 per metric tonne
Residential consumers of water will pay a new tariff of GH?4 per metric tonne compared to the existing GH?3.29.

Non-residential consumers of water – GH?11.21 per metric tonne
On the other hand, non-residential consumers of water will pay GH?11.21 pesewas per metric tonne.

Commercial users will pay between GH?15 and GH?49 pesewas per metric tonne. ?
 Dr Ackah explained that the Commission considered the economic factors including exchange rate and inflation; utility related factors, such as operational cost of the utilities and the general conditions of the consumers who would pay the water and electricity tariffs in arriving at the new tariff for the next three years. ?
He added that other factors include network upgrade/expansion and investments, operation and maintenance of service delivery infrastructure as well as the financial viability of the Utility Service Providers.
He explained that the Commission, in balancing the interests of service providers and consumers, acknowledged that the economic variables that had occasioned the steep increases proposed by the service providers also affected consumers.?
Dr Ackah further said the Commission was most importantly, guided by the supreme interests of consumers and the general economic conditions prevailing in the country.
He stated the PURC is working with the ECG to address the charges of Electricity tariff for compound houses.
The Executive Secretary said these rates, given the Commission, are sensitive and responsive to the positions of all stakeholders in the utility space in line with sections 3(c) of PURC Act 1997 (Act 538).

SMEs consumers will now pay lower tariffs than residential
Dr Ackah said the existing tariff is structured in a manner that slaps industry with punitive tariffs to subsidize residential consumers of electricity.
He explained that the current tariff structure has contributed to the loss of competitiveness of Ghanaian industry including small and medium size household enterprises, noting that the implications for jobs and the general welfare of residential consumers are adverse and obvious.  
He noted that to address the challenge, for the first time, industry including, small and medium scale business owners of hairdressing and beauty parlours/salons, barber shops, tailoring and dressmaking shops, welding, mechanics, cold stores, chop bars, vulcanising and carpentry workshops among others will now pay lower tariffs than the residential consumer class.
Dr Ackah said this decision is to address the high electricity cost for industrial customers, identified in the Association of Ghanaian Industry AGI Business Barometer as the key challenge affecting the competitiveness of the Ghanaian industry in the global marketplace.
He noted that in approving the Weighted Average Cost of Gas (WACOG) for the period (2022-2025), the Commission considered GNPC’s projected gas volumes by gas source, tariff and projected gas supply volumes; and N-Gas.

Water tariff
He added that regarding Water tariffs, the PURC considered the cost of electricity, increased volume/cost of chemicals for raw water treatment, the Ghana Cedi/US Dollar exchange rate, inflation, infrastructure upgrade/expansion, the operation and maintenance of service delivery as well as the financial viability of Ghana Water Company.
Dr Ackah reiterated that the Commission would continue to monitor the operations of the Utility Service Providers to ensure value for money and quality of service delivery.?
All the Utilities had asked for increment in tariff for the 2022-2025 tariff review.?
The Ghana Water Company Limited (GWCL) had asked for an increase in water tariff of 334%, while the Electricity Company of Ghana (ECG) requested for a 148% increase in tariffs for 2022.??
The Volta River Authority (VRA) proposed a tariff increase of 37%, Northern Electricity Distribution Company (NEDCo), 113% , and Ghana Grid Company Limited (GRIDCo), 48% increase in transmission charge.??
The tariff review process started with the receipt of proposals from the following Utility Service Providers, and a proposal from Ghana National Petroleum Corporation (GNPC) in respect of projected natural gas volumes and tariffs by gas supply sources. ?
The PURC then had extensive stakeholder consultations, which afforded the utility service providers the opportunity to explain their proposals to the public and key interest groups such as the Association of Ghana Industries (AGI) and the Trades Union Congress (TUC). ?
This was followed by rigorous analyses, intense debates, and further extensive consultations before the tariff decisions for the period 2022-2025 were accepted.?
The last major review of tariffs was done in 2018, which resulted in a 17.5%reduction for residential and 30% for non-residential in electricity tariff.?

By Julius K. SATSI, Accra