PURC explains why a quarterly tariff review is needed

The Public Utilities Regulatory Commission (PURC) claims that the adoption of quarterly rate adjustments was driven by its resolve to stop the exorbitant growth in charges every few years and to decrease debt.

The Executive Secretary for PURC, Dr. Ishmael Ackah, said during a PM Express interview on JoyNews that there had previously been a significant tariff review that resulted in a rate rise of up to 89%.

This, he claimed, is because when a tariff review is put into place at the conclusion of the three years, variables like inflation and cedi devaluation during that time effect the adjustment.

“When you look at the exchange rate, we use 7.5 for the major tariff. Look at the exchange rate now, if we don’t do anything at all about it by 2025 and let’s say it’s even 12, the increase in the exchange rate alone can push the tariff there to more than 10 times what we are experiencing now.”

“So the board decided that why don’t we have a way of at least adjusting it small, small so that when we get to the major tariff, there any change may not be that much,” Mr Ackah said.

As such, if there will be any change at all it should be quite marginal and not a shock to the general population adding “…so every quarter, whatever it is, we should do it,” he explained.

Regarding debt, he pointed out that the IMF had also suggested throughout the discussions that the quarterly modifications be consistently implemented, arguing that this would assist the energy industry avoid amassing debt.

“…so that if there are any financial gaps when you implement it, at least it helps pay. So we don’t go to 2025, say, energy sector debt is this, and the government may have to introduce taxes and so many other things,” Mr Ackah said.

The rise in energy and water rates of 4.22% and 1.18%, respectively, beginning September 1, 2023, was previously announced by PURC.

The Commission nonetheless granted a 4.22% rise in the average end-user energy rate for non-lifeline residential users, according to a statement released by the PURC on Tuesday, August 22, 2023.

It added, “For the average end-user for water, life-line customers will experience no increase or change in tariff. The Commission however approved a 1.18 % increase in tariff for all other water customer group”.

Mr. Ackah, on the other hand, thinks there is a chance that Ghana’s utility rates won’t rise as normal.

He claimed that in order for this to be accomplished, the exchange rate and inflation rate must be steady or see a decline in their numbers.

“So our hope is for the exchange rate to remain stable or even fall if possible. Inflation would remain stable or even if it will go up, not so much like the June level. If some of these things happen, we will reduce the tariffs,” he said on JoyNews’ PM Express.