The Public Utilities Regulatory Commission (PURC) has justified its recent upward adjustment in utility tariffs, emphasizing that the move is driven by critical economic and operational variables.
Effective April 11, 2025, electricity tariffs have been increased by 14.75%, while water tariffs have seen a 4.02% rise across all consumer categories.
According to the Commission, the adjustments are part of its standard quarterly tariff review, guided by a framework designed to ensure cost recovery and stability within the utility sector.
In an interview on Morning Starr with Naa Dedei Tettey, PURC’s Head of Research and Corporate Affairs, Dr. Eric Obutey, broke down the four main parameters informing the tariff review.
According to him, the Cedi/US dollar exchange rate, domestic inflation, the electricity generation mix (hydro vs thermal), and the weighted average cost of natural gas used in power generation also influence the hike.
He added that electricity production costs also impact water tariffs directly, as roughly 35% of the cost of producing water is tied to electricity consumption.
Beyond the current economic pressures, PURC is also managing an inherited debt of GHS 976 million from previous quarters.
In a bid to reduce the burden on consumers, only 50% of that amount has been factored into the new tariffs, with the remainder to be staggered over subsequent quarters.
Dr. Obutey emphasized that future tariff directions will depend heavily on how these four key parameters evolve.
He said, “The PURC over the weekend, last Friday, made an announcement to the effect that electricity prices will be reviewed upwards by 14.75 percent and that for water by 4.02 percent.
And it basically boils down to four parameters, which you always know about, that we use to correct the tariffs over a quarterly period. And those four factors predominantly are the exchange rate, which I’m sure you know about now, the exchange rate, the inflation, the generation between the thermal and the hydro, as well as the fuel cost in terms of the weighted average cost of gas. Those are the predominant things, the four factors that we use to correct the tariffs on a quarterly basis.”
“And for the case of water, 35 percent of their cost of production is attributed to that of electricity. So whatever we get from electricity, the figure we get from electricity, we pass it through in the case of water production. And that is what affects the water tariffs as well. We still have an outstanding debt of 50 percent of the earlier debt, which is being rolled over into the subsequent quarters, because we cannot claw back everything within one quarter. It’s just over a period to stagger the debt. I cannot speak to whether there’s going to be an increase, a reduction, or maintain, it will depend on the direction in which this particular four factors that I mentioned will go. If we see an appreciation of the cedi against the dollar, it will impact positively on the tariffs.”
“Let’s say right now the rate that we are using is 15.59 cedis to the dollar. If in the next tariff window we see a rate of, let’s say, 13 cedis to the dollar, obviously that will impact positively on the tariff. That means the utilities have over-recovered, and we need to give back to the consumers and that is where you see a reduction in the tariffs. So as to how these four factors I mentioned will play out, that is what will impact on the tariffs. If we see a much more improvement in the hydro, and we are running more hydro than the thermal, obviously it will impact positively on the tariffs. So it will play out depending on how these four factors head, the direction in which they head.”
The Commission reiterated that its approach is designed to ensure neither over-recovery nor under-recovery of utility revenues, striking a balance between economic sustainability and consumer protection.
