PURC suspends new utility tariffs

The Public Utilities and Regulatory Commission (PURC) has said that the actual upward adjustment in utility tariffs for the third quarter of this year was 31.56% for electricity and 14.30% for water.

The Commission in a statement released and signed by its CEO, Dr. Emmanuel K Annan, said the new adjustments in utility tariffs for the third quarter, which would have taken effect from next week Tuesday July 1, 2014, have been suspended in order to make way for the implementation of the second quarter increments, which was approved but not implemented, as the intense erratic power supply experienced nationwide in the second quarter made it difficult to ask consumers to pay more.

Dr Annan said the Commission also decided not to implement the third quarter tariffs adjustment so that consumers will not be burdened with high tariffs since they are already enduring the effects in the cedi fall in their pockets and economic well-being.

He explained that the increment is largely driven by the fall in the value of the cedi against the US dollar and it is intended to preserve the real value of the tariffs approved for the utilities at the beginning of this year.

Since the beginning of the year, the cedi has depreciated by about 23% against the US dollar as efforts to stem the slide have largely been hit and miss or misguided.

“It should be noted that the increase for this quarter is largely dictated by the Ghana Cedi US dollar exchange rate. The Commission is certainly aware of the current challenges consumers are facing with the provision of electricity and water and that is why the Commission has decided to implement a much lower percentage which is the previous tariff for the second quarter for year 2014.

“The Commission wishes to emphasise that a tariff increase at this moment is only meant to maintain the strength of the existing electricity and water tariffs which have been affected in value by the Ghana Cedi to the United States dollar exchange rate,” he said.

On Wednesday, the PURC announced an increase in electricity and water tariffs by 12% and 6.1% respectively following a meeting by the Commissioners.

The increase in utility tariffs is the second time this year that water and electricity prices have gone up following an earlier adjustment in the tariffs by 9.73% for electricity and 6.80% for water in January.

The PURC now adjusts utility tariffs quarterly following the implementation of the automatic tariff adjustment formula, which is a tariff mechanism that tracks and incorporates movements in key determining uncontrollable factors to reflect the cost of electricity and water every three months.

In adjusting utility tariffs, the Commission consider Cedi-US dollar exchange rate, inflation, price of crude oil and natural gas, chemical cost, electricity cost, power purchase cost, demand forecast variations, energy generation mix and fuel mix as the key variables in determining tariffs.

The latest increase in utility tariffs implies more pain in store for consumers- who are also struggling with energy supply rationing and acute fuel shortage in parts of the country following government’s failure to pay bulk oil distributors several billions of dollars it owes them for covertly subsidizing fuel.

It is also expected that fuel prices will imminently go up at most next week as government rounds up its meetings with GPRTU and National Petroleum Authority officials to mitigate the impact the increase in fuel prices will have on consumers.