An appraisal of the legal framework of of the Public Utility Regulatory Commission for effective delivery of service

General Overview
The Public Utility Regulatory Commission (PURC) was set up by Act 538 in 1997 to regulate and oversee the provision of utility services by public utilities to consumers and to provide for related services. Pursuant to section 4 of the Act, the Commission is an independent body constituted to regulate the activities of utility service providers. It is a body corporate with a separate legal personality with the capacity and power to sue and be sued pursuant to its conduct and the laws of the country.

The PURC has a governing body, appointed by the President of Ghana in accordance with Article 195 of the 1992 Constitution and in consultation with the Council of State. Pursuant to section 2 of Act 538, the Governing Body is composed of:

1. a chairman;
2. one person nominated by the Trades Union Congress;
3. one person nominated by the Association of Ghana Industries;
4. one representative of domestic consumers;
5. the Executive Secretary appointed under section 33 of this Act; and
6. four other persons with knowledge in matters relevant to the functions of the Commission.

Among other functions in pursuit of its regulatory duties, the Commission is expected to:

1. provide guidelines on rates chargeable for provision of utility services;
2. examine and approve rates chargeable for provision of utility services;
3. protect the interest of consumers and providers of utility services;
4. monitor standards of performance for provision of services;
5. initiate and conduct investigations into standards of quality of service given to consumers;
6. promote fair competition among public utilities.

In effect, the Regulator (PURC) serves a strategic interface between the service providers and the consumer, with the interest of both actors at the centre of PURC’s regulatory duties.

One of the major functions of the regulator as explicitly captured in Act 538 is to provide guidelines for utility service providers as to the rates and charges these service providers should fairly and reasonably charge for their services. To fulfill this obligation within the remit of the law and requirements, and in accordance with Section 18 of Act 538, the utility service provider submits the proposed tariffs to the commission for review and approval.

The Commission in this regards conducts extensive review of the proposed tariff regime. The review is done after extensive consultation is conducted with key stakeholders in the value chain as provided for by Section 18 Subsection 4 of the PURC Act. The major stakeholders in this case are the government and its allied institutions, the customers and the utility service providers.

In order to remain a firm, neutral and independent regulator, the PURC also conducts a cost of service study to ascertain the validity of the variables that should inform the proposed tariff regime submitted by the utility service provider. In this regard, the PURC understudy the actual cost and revenue requirements of the service provider vis a vis the interest and capacity of the customer in order to get a balanced tariff regime in accordance with Section 17 of the Act. This is done to meet one of the requirements of the functions of PURC; to protect the interests of customers and utility service providers.

Based on the report of the study and to ensure transparency, fairness and the general well-being of the customers and the stability of the service providers, the PURC then sets the rate and charges for onward implementation. The major task after approval of the tariff regime is compliance. As a regulator, the PURC is enjoined by regulation 20(1)(2) of L.I 2413, 2020, to enforce the benchmarked tariffs and to monitor to ensure compliance with what has been approved so that no party will be shortchanged by the other.

Also, the Commission is enjoined by Section 19 of Act 538 to gazette the approved tariffs. For example, on December 12, 2023, the PURC gazetted the approved tariffs as captured by No. 222 in the gazette. This gazette considered Electricity, Natural Gas, Water and Net Metering. Aside the major tariff approval and subsequent gazette as required by Section 19 of Act, 538 and the in accordance with the Renewable Energy (Amendment) Act, 2011 (Act 832), the PURC shall adjust tariff in accordance with the Automatic Adjustment (Indexation) Formula published in the gazette No. 15 of 25^th February, 2011.

It is imperative to note that, while PURC as a public institution is required to acknowledge and to ensure the general well-being of the citizens of Ghana, it is equally required to balance same with the functioning and survival of the utility service provider. Although, within the current scheme of things the private participation forms a critical component in this industry, the regulator is to ensure fair competition of these service providers.

A Composite of Legislations for Regulatory Purposes.

The Public Utility Regulatory Commission is a creature of statute (Act 538). Its composition and functions are thus clearly spelt out in the Act. However, as a regulator, and considering its overlapping roles with other regulators in the utility and the energy industry, the Commission’s regulatory framework is predicated on different pieces of legislations.

For example, as part of its functions, the Commission is required by law to coordinate with the Energy Commission, which is the technical regulatory body in Ghana’s energy sector. While the PURC by law is expected to regulate utility services including electricity, natural gas and water, the Energy Commission on the other hand regulates the energy sub-sector including electricity generation, transmission and distribution. It is therefore imperative that given these overlapping and common responsibilities, the PURC and the Energy Commission need to coordinate their efforts at ensuring a stable and efficient provision of utility services.

The following is Legislative Architecture of the PURC Regulatory regime:

1. The Renewable Energy Act, 2011 (Act 832)

The Energy Commission as a technical regulator of the energy sector and the PURC as the economic regulator of the utility service providers, have some common regulatory oversight over some of these utility service providers. And these regulatory functions and powers are embedded in some legislative Instruments aside the main Acts of Parliament which created these regulatory bodies like the PURC and the Energy Commission. One of such legislative creature is the Renewable Energy Act, 2011 (Act 832).

Under this Act, the PURC just as the Energy Commission is clothed with some powers and responsibilities under Section (5) to among others approve:

1. rates chargeable for the purchase of electricity from renewable energy sources by public utilities.
2. charges for grid connection
3. rates chargeable for the wheeling of electricity from renewable energy sources.

Equally, under Section 25, the PURC is required in consultation with the Energy Commission specify the percentage level of electricity to be purchase from a renewable energy source. And the PURC shall make this determination taken into consideration, among others the technology being employed to generate the electricity from the renewable source.

Under the PURC Act, one of the essential functions of the regulator is to set guidelines for the charges and rates the utility service providers should reasonably charge for their services provided. Indeed, under the Renewable Energy Act, this function has been further grounded in the case of negotiation of Power Purchase Agreements and the purchase of power from any renewable energy sources by power utility companies. In this case, under Section 25 of Act 832, captured under the “Feed-in-tariff rates”, the PURC is charged with the responsibility to prepare the guidelines for the rates chargeable in any of the two instances.

The rates as approved by the PURC under this Act are set to be published in the Gazette as done for headline tariffs for all utility providers. In this regards, Section 29 of this Act provides thus, “feed-in-tariff rates approved by the Public Utilities Regulatory Commission for electricity generated from renewable energy source shall be published by the Public Utility Regulatory Commission in the gazette and in at least one national daily newspaper.”

2. The Legislative Instrument (L.I 2413), 2020.

A public body created by an Act of Parliament such as the PURC derives its powers from the Act but exercises such powers on the orbit of a subsidiary legislative instrument. On this, the Legislative Instrument (L.I 2413), 2020 was passed. The preamble to this L.I reads, “In exercise of the power conferred on the Public Utility Regulatory Commission by section 48 of the Public Utility regulatory Commission Act, 1997 (Act 538), these regulations are made…”

These regulations set out how and which areas the PURC can exercise its powers and functions. There are 50 rules under this Legislative Instrument, including rule 49 which is a miscellaneous provision and rule 50 which provides for the interpretations of provisions under the L.I.

Specifically, the purpose of the regulations is provided under rule one (1). It provides thus, “the purpose of these regulations is to provide for:

1. a transparent regulatory framework to ensure a safe, adequate, efficient, reasonable and non-discriminatory service; and
2. an enforcement framework to ensure the quality of service to the consumer

As a regulator, there are specified service providers that fall under the regulatory framework/umbrella of the PURC. And all these service providers, the consumers of these services and the PURC draw their rights and obligations from these regulations set out under the L.I 2413. Rule two (2) captures the service providers that the PURC has regulatory oversight over. These include:

1. a public utility licensed by the Energy Commission to engage in -- i) supply, transmission, distribution or sale of electricity; and ii) processing, transportation, distribution or sale of natural gas.
2. a public utility licensed or authorized under any relevant enactment to engage in the production, transmission or distribution of water;
3. a customer of a service; and
4. a consumer of a service

As a regulator, the PURC plays the role of a quasi-judicial body in the resolution of disputes between the players in the scheme of things and to issue such orders as may be applicable in the enforcement of the rights and obligations of the service providers and consumers of these services. Rules 3, 4, 5 and 6 of the L.I 2413, provide for the rights and obligations of both the Utility Service Providers and the Consumers. And to enforce these rights and obligations, regulation 7 empowers the Commission to issue such orders as may be necessary and reasonable in this regards.

Under the L.I. 2413, 2020, one of the core mandates of the PURC as a quasi-judicial body is to resolve disputes amongst the players in the utility service delivery and the consumers of the services. In exercise of its powers in the wake of dispute resolution, the PURC acting within the confines of Section 30 of Act 538 and the L.I. 2413, there is a tripartite architecture in this regard. These are:

1. settlement agreement: this is mostly facilitated by the PURC, between parties. Under rule 8 of L.I 2413, the Public Utility with approval by the PURC, is required to establish procedures for dealing with complaints related to the service being provided. So complaints from customers or other utility service providers may be lodged with the service provider for settlement. This must be done within the remit of the L.I, apply due process and particularly taking into consideration, the rules of Natural Justice (ie reasonable notice to parties and fair hearing).
2. mediation by the PURC: where the parties are not able to resolve the dispute amicably and in good faith, and by themselves or through the facilitation of PURC at the settlement stage, rule 9 provides for the complainant to escalate the complaint with the PURC, or where the Commission is satisfied that the issue in dispute could be best resolved through mediation. In this regard, the commission may invite the parties to the complaint and conduct mediation. It is imperative to note that, since the Alternative Dispute Resolution (ADR) has become an integral part of our dispute resolution mechanisms, such issues such as these are mostly better handled by quasi-judicial bodies through the ADR processes.

The PURC may, under rule 12 of the L.I., conduct a preliminary investigation into a complaint and based on the report, proceed with the mediation process or advise the parties to settle the dispute in good faith. This is also done in accordance with the established guidelines for mediation process by the commission and in accordance with the rules of Natural Justice and due process.

3. formal Hearing Process: under rule 14, the PURC is enjoined to escalate the disputed issues for a formal hearing if the parties fail to settle or the mediation process failed to settle the dispute. Or where in the honest belief of the Commission, the nature of the issue require a formal hearing, without prejudice to the mediation or settlement processes, the issue may be settled through a formal hearing. Just like the mediation process, the formal hearing shall be conducted in accordance with the established guidelines by the Commission on formal hearing.

Take note of the following:

1. if in the estimation of the Commission if the issue can be resolved by an expert, rule 16 of the L.I. requires the Commission to outsource the resolution to such an expert.
2. under rule 48 of the L.I. and in accordance with Section 32 of Act 538, the Commission may apply to the High Court for the enforcement of its decisions, orders or directives.

3. The legislative Instrument (L.I) 1911, Natural Gas Distribution and Sale (Technical and Operational) Rules, 2007. Under the L.I 1911, sub-rule 8(5) provides for the billing associated with the distribution and sale of Natural Gas to utility companies. As a regulator, the Public Utility Regulatory Commission is expected to approve the tariffs set by these companies. So, the billing processes end with the approval by the PURC. The Energy Commission, the technical regulator of the Energy Sub-sector at the other end has a role to play in the distribution of this gas to the Power Utility Companies (both private and state-owned).

Also, sub-rule 22 provides for the complaints in times of disputes and non-compliance with the law with respect to the sale and purchase agreements with the suppliers and consumers of the gas. Specifically, sub-rule 22(1) provides that where there is a dispute, the consumer is required to first lodge the complaint with Distribution Company. And where the Distribution Company fails to address the customers’ complaint, then sub-rule 22(2) provides for the customer to lodge the complaint with the PURC in accordance with the Public Utilities (Complaints Procedure) regulations 1999, (L.I) 1651) for amicable settlement.

4. The Legislative Instrument (L.I) 1912, Natural Gas Distribution and Sale (Standards of Performance) regulations, 2007. The preamble to this L.I states, “in exercise of the powers conferred on the Energy Commission by section 27 of the Energy Commission Act, 1997, Act 541 and acting in consultation with the Public Utility Regulatory Commission, these regulations are made…”

Under this L.I, the areas of interest of the PURC are: a) service connection, b) quality of supply of natural gas, c) metering, and d) dispute resolution. Specifically, sub-rule 2(1) provides for metering, where the Distribution Company is expected to among others, provide, install and maintain a meter that will measure and record the amount of natural gas supplied to the customer within the specified accuracy limits of the meters’ class. In doing so, the Distribution Company will require the approval of the PURC for the calibration and charges to be set for the customers. Also, where a customer suspects that there are defects on a meter, the customer is empowered under sub-rule 5 of this L.I to report to an independent body (Standards Authority or PURC) for calibration.

Under sub-rule 20(1), a Distribution Company or a customer may refer a dispute to the PURC for amicable settlement using the dispute resolution mechanisms available to the Commission. In furtherance to the resolution of such a dispute, the Distribution Company of the Customer is required by sub-rule 20(2) to furnish the PURC with relevant documents and information in this regards. Indeed, sub-rule 20(4) of L.I 1912 imposes on an unsuccessful party in the dispute to bear the cost the PURC shall incur in the process of resolving the dispute.

5. The Legislative Instrument (L.I 1934), Electricity Transmission (Technical Operation and Standards of Performance) Rules, 2008. The rules set out under this L.I for the purposes of regulations include to:

(a) define the national interconnected transmission system; and

(b) establish the requirements, procedures, practices and standards that govern the development, operation, maintenance and use of the high voltage national interconnected transmission system.

Sub-rule 2 of the L.I provides for the utility provider to ensure that the transmission system provides a fair, transparent, non discriminatory, open access, safe, reliable, secure and cost efficient transmission and delivery of electricity.

Under rule (19) of this L.I, the Utility provider is expected to report and provide such information to the PURC and the Energy Commission on the performance of the transmission system in a form and at such times as may be determine by the Commission. In terms of dispute resolution, rule (29) sub-rule (4) provides for the mode and mechanisms the Commission shall adopt in resolving disputes amongst the utility service providers and the customers.

6. The Legislative Instrument (L.I 1816), Electricity Supply and Distribution (Technical and Operational) Rules, 2005. Under this L.I, there are five major areas with sub-rules. These include: a) Supply and Metering of electricity, b) Quality of Supply, c) Electricity Interruption, d) Electricity Billing; and e) Bill Payment. Under each of the five areas, the PURC has been clothed with oversight responsibilities.

Rule (2) sub-rule (7) provides, “where with the approval of a supplier a customer finances the development of the supplier’s distribution system, the customer shall subject to sub-rule (8), be entitled to a 60 percent refund of the investment from the supplier when the supplier subsequently connects other customers to the newly developed part of the distribution system.”

In consonance with sub-rule (7), sub-rule 8 provides, “a supplier shall establish and submit in writing to the Public Utilities Regulatory Commission for approval, procedures for making the refund stipulated under sub-rule (7).” In furtherance, sub-rule (9) provides, “the Public Utilities Regulatory Commission may direct the supplier to review its procedures and may approve acceptable proposed modification to the procedures.”

It is also a requirement by this L.I for the supplier that intends to shed load to notify the PURC, and this is provided under Rule (17) sub-rule (2). In addition to notifying the PURC, sub-rule (3) provides for the supplier to inform the general public through the newspapers, radio or television.

Under rule (20) sub-rule (7) of (L.I. 1816), where the customer and the supplier are unable to agree to a payment plan under any supply-purchase agreement, the matter shall be referred to the Public Utility Regulatory Commission for a resolution.

As a regulator, the PURC also creates an interface for complaints and dispute resolution between a supplier of electricity service and the customer. Rule (33) sub-rule (1) provides that a customer who is not satisfied with electricity supplied, may first complain to the supplier either orally or in writing. And where the supplier fails to address such a complaint to the satisfaction of the customer, the customer may elect as a second option, to lodge a complaint with the PURC in accordance with the Public Utilities (Complaints Procedure) Regulations, 1999 (L.I. 1665) for amicable resolution.

Pursuant to Section 3 of Act 538, the regulator (PURC) is required to:

(a) provide guidelines on rates chargeable for provision of utility services;

(b) examine and approve rates chargeable for provision of utility services;

In view of the above, Rule (37) of L.I 1816 provides for Electricity Tariff setting and review. Under this rule, where an electricity supplier is due to request for tariff review, the supplier shall request same from the PURC in pursuance of rules 38, 39 and 40 of this L.I.

Finally, under this L.I, the PURC is empowered to impose such pecuniary sanctions/penalties on a supplier who contravenes any obligations set out under the L.I, and the PURC shall do so in due consultation with the Energy Commission. This is provided for under Rule (41) of this L.I.

Others:
Other Legislative Instruments employed by the PURC in its regulatory mandates include:

1. Legislative Instrument (L.I. 1913)
2. Legislative Instrument (L.I. 1935)
3. Legislative Instrument (L.I. 1937)

Challenges and Suggestions:

1. The challenges of regulatory bodies in Ghana are abound. It is very imperative to note that, within the operational framework of these regulatory bodies, they are supposed to Act as independent from the control and directions of anybody or institution especially, Government. So one of the major challenges facing as having been identified is the issue of independence of the Commission provided for under Section (4) of the PURC Act. it is trite knowledge that, with the appointing authority in the hands of the President, it is most likely to be abused to the extent making such appointments that may be used to direct and control the operations of the Commission. It is therefore my suggestion that, if the PURC must be independent as per the principle of independence without a loop for the President, anybody in government or institution to covertly manipulate or control PURC.

Indeed, the PURC (Amendment) Act, 2010 (800), per section 35A, has set out to impose a levy on electricity and natural gas transmission services. Although, this is to create another revenue generation handle for the PURC in addition to those provided in section 35 of Act 538, proceeds from these levies are expected to be deposited into an account to be approved by the Minister for Finance. This is in addition to government subvention as provided in Section 35(a) of Act 538. This goes to confirm that the Commission is not wholly independent financially. In addition to this, the government still has a long hand to the tariff regimes to be evaluated and approved by the Commission. Going forward, there has to be a complete independence for the PURC, both financially and technically.

2. Under rule 48 of the L.I. and in accordance with Section 32 of Act 538, the Commission may apply to the High Court for the enforcement of its decisions, orders or directives. For a regulatory body such as PURC to be technically effective, it has to have the complete authority to enforce its orders. This could be the reason that the fine the PURC imposed on ECG Board Members for breaching the regulatory rules which obliges the ECG and its Board to notify consumers and the Commission before engaging in load shedding between January and March 2024 was flouted by the ECG Board. The argument was that the PURC did not have the power to surcharge the Board Members without enforcement orders by the High Court. Going forward, it is my suggestion that the law could be amended to set a threshold within which the Commission could surcharge any of the players in the bracket of the utility service delivery.
3. Under rule 17 of the L.I 2413, the PURC may establish Consumer Service Committees in pursuance of section 31 of ACT 538, in geographical areas where the Commission deems necessary to function as an extension and agent of the Commission. Among other functions, these Committees are required to disseminate information to the consumers in their respective geographical locations and to escalate complaints from these consumers to the Commission for amicable resolution. There is a challenge because PURC is not too visible as required by this rule; in most remote places, these committees are not set up and so to get PURC available to handle complaints during emergencies. It is my candid suggestion that, the commission should take steps in setting these committees up in very remote areas to handle complaints from vulnerable customers.

BY ISSIFU SEIDU KUDUS
(AN INTERN FROM THE GHANA SCHOOL OF LAW)