Consumers anxious; release new electricity tariffs now

Consumers anxious; release new electricity tariffs now – ACEP to PURC
Ben Boakye, Executive Director of ACEP

The Africa Centre for Energy Policy (ACEP) is worried about the delay by the Public Utilities Regulatory Commission (PURC) to announce new electricity tariffs in the country.

According to ACEP, the delay is creating anxiety among consumers especially those in the business community.

The Commission was supposed to have announced new tariffs in February 2019 but deferred the decision to the end of the second quarter of 2019 which is expected to take effect on July 1, 2019.

The decision to maintain electricity tariffs, according to the PURC, then, was due to “critical emerging issues in the sector… which are expected to affect the final tariff setting.”

“Amongst others, the emerging issues are related to the planned relocation of the Karpowership Plant resulting in fuel switch savings from Heavy Fuel Oil (HFO) to Natural Gas. Secondly, reductions in the price of natural gas are anticipated due to ongoing negotiations by government. These matters are outside the purview of PURC but their outcomes are likely to have measurable impact on the Commission’s decision,” the PURC explained in February 2019.


But ACEP in a statement signed by its Executive Director, Benjamin Boakye insists that if PURC is bent on meeting the July 1 deadline, then it has to announce new tariffs as soon as possible.

“The practice has been that new tariffs are announced at least two weeks prior to effective date. This is necessary to allow stakeholders to adjust their systems and budget to accommodate the new tariff. However… [barely] 11 days shy of the proposed 1st July tariff effective date, the tariff has not been announced.”

“ACEP does not expect the Commission to, within few days to the effective date, ambush electricity consumers with the new tariff which holds about 90% chance of upward adjustment. This is because doing so potentially distorts the plans of consumers significantly, particularly the business community whose investment decisions have been held hostage by the uncertainty in the expected tariff adjustment level,” ACEP added in the statement.

The policy think tank expects the Commission to be fully sensitive to the realities on the ground “in order not to inject unnecessary shock into plans of consumers and, by extension, the economy.”

“ACEP, therefore, calls on the Commission to communicate to consumers what its intentions are, as to whether it will extend the effective date of the tariff or immediately announce the tariff, to allow consumers time to absorb and adjust to the changes, whatever that may be,” the statement added.

Below is the full statement from ACEP:

PURC MUST COMMUNICATE ITS ELECTRICITY TARIFF NOW, IF THE 1ST JULY EFFECTIVE
DATE IS STILL RELEVANT.

The Africa Centre for Energy Policy (ACEP) is worried about the delay by the Public Utilities
Regulatory Commission (PURC) to communicate the tariff which the Commission announced
in February would take effect from 1st July 2019, following the mandatory major tariff review
consultations in January this year.

In a press statement issued on 27th February 2019, the Commission stated that its decision
to postpone the announcement of the tariff to July was “… due to critical emerging issues in
the sector which are expected to affect the final tariff setting. Amongst others, the emerging
issues are related to the planned relocation of the Karpowership Plant resulting in fuel switch
savings from Heavy Fuel Oil (HFO) to Natural Gas. Secondly, reductions in the price of natural
gas are anticipated due to ongoing negotiations by government. These matters are outside
the purview of PURC but their outcomes are likely to have measurable impact on the
Commission’s decision.”

The shift in effective date of the major tariff was therefore to allow the Commission to
accommodate the important variables it expected would influence the tariff.

The practice has been that new tariffs are announced at least two weeks prior to effective
date. This is necessary to allow stakeholders to adjust their systems and budget to
accommodate the new tariff. However, today is the 19th of June (11 days shy of the proposed
1st July tariff effective date), yet the tariff has not been announced.

ACEP does not expect the Commission to, within few days to the effective date, ambush
electricity consumers with the new tariff which holds about 90% chance of upward
adjustment. This is because doing so potentially distorts the plans of consumers significantly,
particularly the business community whose investment decisions have been held hostage by
the uncertainty in the expected tariff adjustment level. ACEP’s interactions with key
consumers of electricity show that anxiety is already high within the business community and
expects the Commission to be fully sensitive to the realities on the ground in order not to
inject unnecessary shock into plans of consumers and, by extension, the economy.

ACEP therefore calls on the Commission to communicate to consumers what its intentions
are, as to whether it will extend the effective date of the tariff or immediately announce the
tariff, to allow consumers time to absorb and adjust to the changes, whatever that may be.

Signed
Benjamin Boakye
Executive Director

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