The Public Utilities Regulatory Commission (PURC), regulator of the country’s utility sector has adjusted downwards electricity and water tariffs for the first time.
Residential and non-residential consumers within 0 – 50 units would have no change in their utility tariffs but those within the 51 – 150 bracket are going to have a reduction of -6.2%. Those within this bracket were paying 17.00% but will now pay 15.95%. Those within the bracket of 151 – 300 will also have a reduction 0f 6.2%.
The reduction will take effect from Tuesday, March 1 2011. The new tariffs were announced during the launch of the Automatic Adjustment Formula on Tuesday February 15, 2011 at the College of Physicians and Surgeons in Accra.
The Automatic Adjustment Formula will seek to review utility tariffs on a quarterly basis in order to address movements of external factors that affect water and electricity tariffs in the country.
What this means is that with the automatic adjustment formula in place, utility tariff adjustments will be done gradually until it reaches the full recovery level instead of waiting for a year before increasing electricity or water tariffs.
This system is similar to the one adopted previously by the National Petroleum Authority (NPA), which until recently was reviewing petroleum prices every two weeks depending on the prices of the commodity on the international market. The automatic adjustment formula was introduced in October 2003 in order to help project electricity tariffs gradually to full cost recovery level.
Unfortunately, the formula was not robust enough to move the tariff, especially the Distribution Service Charge, to full cost recovery levels hence its abandonment since February 2005.
PURC in June 2010, increased tariffs for the residential class of electricity customers, which ranges between zero and 42 percent depending on consumption and between 21 and 32 percent for Ghana water consumers.