Reduce Electricity Tariffs To Reflect Current Production Cost – PURC Told
A Research and Public Policy Think Tank is asking the Public Utilities Regulatory Commission (PURC) to review electricity tariffs for all classes of electricity consumers to reflect the current cost of generation in the electricity power mix.
“In the light of the falling prices of the key input fuel for power generation on the world market, it is fair and reasonable for the PURC to consider immediate review of electricity tariffs to give relief to businesses and consumers.”
“From the last review of tariffs which took effect from July 1st, 2019, the Commission made their tariffs determination based on some key assumptions which have changed substantially. With respect to Natural Gas and Heavy Fuel Oil (HFO) as fuel for generation of electrical energy for the 2019-2020 tariff period, the Commission approved a US$ 6.08/MMBtu as the Weighted Average Delivered Price of Gas and US$ 390/Metric Tonne for HFO,” said Appiah Kusi Adomako, the Country Director CUTS Ghana.
Speaking to a cross section of the media in Accra, Mr. Adomako stated that “now with the fall in demand for crude oil and natural gas, the current price for natural gas has fallen from $6.07/MMBtu in July 2019 to $1.8/MMtu as of today. At the same time, crude oil has fallen to about $20 per barrel”.
“According to the Ministry of Energy, the total installed capacity for existing plants in Ghana is 4,132MW consisting of Hydro 38%, Thermal 61% and Solar less than 1%. Since about two-third of Ghana energy mix is from thermal sources which use either natural gas or crude oil which has seen a drastic fall in prices from the previous review, the Commission should as a matter of priority consider tariffs review,” he added.
The Think Tank says reducing electricity tariffs at this point is not a humanitarian act to consumers of electricity, but rather it is grounded in mathematics, accounting and economics principles.
Mr. Adomako said “all over the world, countries that depend on natural gas and fuel have seen prices of electricity going down and for that reason Ghana cannot be an exception to this obvious reality. As it has always been the case for tariff review in Ghana whereby utility providers submit proposals to the PURC for upward review, today, we the consumers of electricity is in Ghana are calling on the Commission to act on the interest of electricity consumers and review prices down.”
Mr. Appiah Adomako is hopeful that a timely reduction in the tariffs would help businesses and consumers who would have been impacted heavily by the coronavirus pandemic.
With most people at home on reduced income and businesses operating under capacity as a result of the global pandemic, a reduction in tariffs would go in a long way to mitigate their plight.
CUTS International is an independent non-profit economic policy research, advocacy and capacity building think tank with regional centers in Accra, Lusaka, and Nairobi, Geneva, Delhi, Jaipur and Washington, DC.
CUTS' functional areas are in trade and development, regional integration, competition policy, economic and investment regulation as well as consumer education.