Approve 148% tariff proposal or be ready for 200% in two years’ time – ECG tells PURC

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General Manager, Regulatory Management of the Electricity Company of Ghana (ECG) Sylvia Noshie has indicated that if their proposed 148% increase in tariff is not approved, the company may be forced to make 200% increment demand next year.

Madam Sylvia Noshie emphasised that the 148% proposed tariff increase is realistic and they are only asking to pay full recovery tariff to enable ECG to stay in business.

“Our proposal was submitted last year but unfortunately the regulator couldn’t look at it. As at last year our proposal was 130% but we are forced to review it to meet the prevailing rates in 2022 and that explains the difference” she told Alfred Ocansey on 3FM Sunrise Morning Show on Tuesday 10 May, 2022

She explained that metals constitute very important inputs in power distribution but the prices of metals such as copper and aluminum have increased consistently for over two years at an average of rate of 4% per month, so the rippling effect of the current macroeconomic situation coupled with the high prices of distribution input is unbearable for the Electricity Corporation.

The General Manager also indicated that at the last approval, the distribution business was made up of an Asset Owner and an Operator. Currently, the asset owner is the same as the operator and so it is a good reason for the regulator to review our tariff. “The tariff which is existing now was meant for a distribution business which had a different assets owner and different operator” she submitted.

Another proposal the ECG submitted to PURC according to Sylvia Noshie is for a change in the tariff structure since the current one has multiple bands which has its advantages for both the distributor and the customer. However, on the side of the utility it has its implication challenges when we have this kind of structure.

“ECG also had to purchase very expensive meters which can mimic this kind of multiple band and so, in this proposal, one of the factors that we considered is the review of the band” Noshie disclosed

“Customers find it difficult to even understand their bill and it is a kind of disincentive for the payment of bills. Also, this does not encourage customers to genuinely increase their consumption” she said.

Another reason given for the 148% tariff increase proposal is the adverse impact of the microeconomic variables such as the inflation and exchange rate. “When the current tariff was approved, the exchange rate was about 5.5 to the dollar and as at the end of first quarter of 2022 it was 7.8 cedis to a dollar. Inflation was 8% in 2019 but as at the end of the first quarter of 2022 it was 19.4.”

To the question of why consumers should have to pay the losses incurred by ECG; Madam Sylvia assured that “Now that the COVID is over, we are going all out to tackle system losses and the illegal connections that are affecting our revenue. Also, if this tariff is approved, it will help us make investments to tackle technical losses. It all boils down to money”

By Samuel Afriyie Owusu