PURC justifies 150% increase in utility tariffs

The Public Utilities Regulatory Commission is justifying a proposed utility tariff increment as realistic despite consumers concern that a 150% adjustment is too much.

Reasons

An economist and member of the Electricity Company of Ghana Utility Tariffs team Ebenezer Baiden explains the ECG loses 38p on every kilowatt per hour it distributes, and this could be met by its demands for a 166% increase in tariffs.

"As we wait, ECG is losing... it cannot pay its suppliers", he said.

Speaking to Joy News, Nana Yaa Gyantuah, the Director of Public Affairs at the PURC justifies the increment saying unfavorable foreign exchange rate is eroding the value of the current tariff regime.

She said power generation and distribution companies need to meet a 10% annual increase in demand as a result of residential and business expansion in the country.

There is also the problem of suppressed demand where existing consumers are dissatisfied because of low voltages and power cuts, she added.

Nana Yaa revealed, the last time any increment was announced was in 2010 and since then, the cost of doing business has shot up. This means companies need to balance their books in order to attract investments, she defended.

She says the inability of Ghana to access gas from a stalled West African Gas Pipeline project means a dependence on crude oil to generate power - an expensive alternative.

Nana Yaa Gyantua said these problems facing utility companies are worsened by rampant illegal connections and tampering of meters.

Why not adopt a gradual adjustment?

Yes, some automatic gradual adjustments are made quarterly, Nana Yaa revealed, but the external factors have a greater impact that neutralizes these minimal adjustments. Again, she says, these adjustments do not go beyond a threshold that could make significant impact in addressing the country's energy concerns.

John Peter Amewu, Director of Policy and Research at the African Center for Energy Policy adds that political leadership over the years have been reluctant to "bite the bullet" and increase tariffs so they keep piling up until a sudden increase becomes unavoidable.

What will the increase tariffs achieve?

Nana Yaa Gyantua maintains that the increase in tariffs will allow ECG to procure transformers to expand access and help utility companies to cut down on losses.

Speaking for ECG, Ebenzer Baiden said the company would use the adjusted tariffs to improve on how the company is able to detect waste.

Currently, the PURC has set a benchmark of 21% loss in power generations and distribution, and companies who make more than this level of losses will be punished.

She said these punitive measures are factored in an automated tariff module. The module also ensures that losses are not passed on to the consumer, she said.