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PUBLIC UTILITIES REGULATORY COMMISSION

PUBLIC UTILITIES REGULATORY COMMISSION

PRESS RELEASE

Approved Electricity and Water Tariffs for the Period

March 01, 2011 to May 31, 2011

In May 2010, the Public Utilities Regulatory Commission announced new electricity and water tariffs effective 1st June, 2010 after having undertaken a major review of the tariff proposals submitted by the utility service providers.

As part of the announcement, the Commmission indicated that it was going to re-introduce a revised Automatic Tariff Adjustment Formula (AAF) in early 2011. The AAF which was originally implemented from 2003 to 2006, provided a mechanism for periodic tariff adjustments to correct for movements in external factors in order to preserve the real value of tariffs approved for the utilities. Some of these external factors were the world market crude oil price and Cedi-US Dollar Exchange Rate. In essence, the AAF provides a smoothening effect in tariffs in that the formula avoids one-time major adjustments that may be too burdensome for consumers. It also enables businesses and industries to plan effectively.

In the course of a comprehensive revision of the AAF, the Commission consulted various stakeholders (Government, Parliament, TUC, Association of Ghana Industries (AGI), Ghana Chamber of Mines, Consumer Association of Ghana, Consumer Protection Agency, Association of Market Women, the Media and the Utility companies). The AAF will be implemented quarterly with the first quarter commencing March 01, 2011 to May 31, 2011. Subsequently, major tariff reviews will only be carried out on the basis of significant and substantial investments undertaken by the utilities, which may not have been accounted for in the existing tariffs as approved by the Commission. 

The revised Automatic Adjustment Formula takes into consideration the following variables:

  • Hydro-thermal Generation mix
  • Fuel price change particuarly Light Crude Oil Price
  • Consumer Price Index
  • Ghana Cedi – US Dollar Exchange Rate

The main feature of this formula is that it uses the above variables to track changes in each cost item in the total cost of operations of the utilities over time. This enables the necessary adjustments to be made in electricity and water tariffs. It must be noted that the application of these variables may result in either a downward or upward movement in utility tariffs, depending on the direction of movement.

It should be noted further that electricity is a major component in the operations of Ghana Water Company Limited constituting about 30% of the overall cost of water production. Hence, downward and upward movements in electricity tariffs would ultimately affect water tariffs.

The Commission now takes the opportunity to announce the electricity and water tariffs for March 01, 2011 to May 31, 2011 as computed under the new AAF.

Prevailing conditions in the world economy indicate an increasing trend in the world market price of crude oil, from about USD75 in June 2010 to about USD 102 in February 2011. This development would normally suggest an upward review of electricity and water tariffs. However, the availability of natural gas from Nigeria through the West African Gas Pipeline, and a high hydro component in the generation mix together have reduced the cost of electricity generation.

This has therefore enabled the Commission to approve a reduction in both electricity and water tariffs.

It is expected that the availability of compressed natural gas in the next quarter  may indicate further reductions. For the quarter March 01, 2011 to May 31, 2011, the new electricity and water rates as reviewed by the Commission using the revised AAF are as follows:

Key Highlights of the Revised Tariffs:

  1. The Service Charge for electricity Lifeline consumption (i.e. 0-50 units a month exclusive) has been reduced from GH¢1.5 to GH¢1.0, a 33.3% reduction. This is to provide further relief to consumers in that critical bracket of consumption.
  2. The calculation of percentages as per the schedules attached does not include Service Charges.
  3. The tariffs announced by PURC do not include VAT, NHIL as these taxes lie outside the Commission��s mandate.
  4. ECG, NED and GWCL are to take note that electricity and water consumed in February but which fall within the March billing cycle should not be charged at the new rates. Any such billing should be reported to the PURC for urgent redress.

Conclusion

The Commission expects the highest standard of service delivery from the utility service providers. The Commission is also using this opportunity to urge consumers to continue to pay their bills in full, on time and report any illegal practices which undermine the operations of the utilities, and affect their financial viability and delivery of good quality service.

..............................................

Dr. E.K.Annan

Chairman,Public Utilities Regulatory Commission

15th February 2011
Appendices

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