If the government does not subsidize electricity tariffs, consumers will face astronomical increases in light bills beginning in August 2022, as the Electricity Company of Ghana demands a 148 percent increase in tariff.
According to a proposal submitted to the Public Utilities Regulatory Commission (PURC) by the power distributor, the adjustment should be made between 2019 and 2022.
The ECG has since proposed an average tariff increase of 7.6 percent over the next four years to cover Distribution Service Charges (DSC).
The high increase in the Distribution Service Charges was attributed by ECG to the gap that has developed over the years between the actual cost recovery tariff and the PURC approved tariffs, as well as the cost of completed projects.[the_ad id=”7331″]
It also mentioned the continued application of the current tariff (which was 14 percent lower) beyond the regulatory period, as well as the impact of macroeconomic factors such as inflation and exchange rate fluctuation.[the_ad id=”7329″]
“The result of ECG’s tariff proposal for the next five years shows an approximately 148% increase on the current DSC1 in 2022 and an average 7.6 percent year on year increase from 2023 to 2026.” The high increase in the DSC1 for 2022 could be attributed to the years-long gap between the actual cost recovery tariff and the PURC-approved tariffs, as well as the cost of completed projects.”
“Similarly, ECG’s proposed DSC2 shows a higher increase of 28.4 percent in the first year (2022), with subsequent years’ increases increasing by an average of 2 percent from 2022 to 2026,” it added.
The power distributor reiterated that financial sustainability is critical because it affects the entire energy sector.
“The financial sustainability of the Electricity Company of Ghana is critical because it has ramifications for the entire energy sector.” With the distribution industry facing massive investment needs over the next five years, it is expected that the proposed tariff increases will be approved in order to maintain efficient and reliable electricity service.”
“Over the next five years, the DSC will need to rise steadily (at a rate of 7.6 percent on average) to cover distribution costs.” The approved BGC is expected to correspond with the commercial terms of PPAs (Power Plant Agreements),” it added.
ECG proposes a streetlight tariff that includes full cost recovery.
The ECG, on the other hand, suggested working with the PURC to determine the defined threshold for a lower tariff for non-residential or commercial customers.
The company also wants the government to help it implement a streetlight tariff so that it can properly account for the full cost of streetlight consumption