Climate Change & Energy
ECG justifies 148% trariff increase proposal; says it’s operating at high loss
Source: ghenvironment.com - May 11, 2022
The Electricity Company of Ghana (ECG) has assured that if the proposed 148% increment in tariff is approved, the company will not adjust tariffs above 10 percent year-on-year for five years.
ECG has been heavily criticised for requesting a 148% increment for the year 2022, but the company says it will help drastically reduce losses in its operations.
“We are not faulting the Public Utilities Regulatory Commission [for not allowing us to increase tariffs over the years], but as a utility service provider, it is having a negative impact on our operations. Over the period, if you put these minimal increases together, you are getting a very wide gap between the prevailing tariffs and what we will call a cost recovery tariff. The tariff has reduced considerably”, says General Manager for Regulatory Management at ECG, Sylvia Noshie.
She was speaking at a stakeholders’ consultative meeting for the multi-year major tariffs review under the auspices of the PURC.
The company says it will only be able to recover from its losses if its upward adjustment proposal is approved.
“In the last few years, the only quarter adjustments we had was on October 1, 2019, and it was just 0.47 percent. Unfortunately for us, the last tariff approved by the regulator saw a 14% reduction on the previous tariff of March 2018. This has been the pattern over the years. Usually, we will come up with our distribution cost and proposal, but what you get the Commission to approve is very minimal”, Slyvia Noshie explained.
Apart from asking for a 148% increment in tariff for 2022, the Electricity Company of Ghana is also proposing that the PURC gives it clearance to charge consumers street light tariff.
“The ECG is also proposing to the PURC to introduce a street light tariff. Studies by the Ministry of Energy estimate the cost of street lights to be 108.65 million dollars a year. Currently, on the bill, we all see the public light levy and that’s 30 percent of the actual cost.”
Meanwhile, Deputy Energy Minister Andrew Egyapa Mercer has said, the demand by the Electricity Company of Ghana for a 148 per cent hike in tariff is not a harbinger of dumsor.
The demand by the Electricity Company of Ghana for a 148 per cent hike in tariff is not a harbinger of dumsor, Deputy Energy Minister Andrew Egyapa Mercer has said.
Mr Mercer explained that the government has engaged Independent Power Producers (IPPs) for additional power capacity to augment the current power generation efforts.
“I do not foresee that we are going to have dumsor anytime soon”, he told asserted, stressing: “I do not foresee that the conversations that are actually ongoing today will lead to dumsor anytime within the foreseeable future”.
“Like I indicated, the Energy Commission has a demand forecast system that projects additional power generation that government from time to time ought to add to the generation mix,” he said.
“We are following that [power generation mix] strictly and will ensure that there are no gaps that would then lead to deficiency in our generational capacity that could result in lack of electricity for our consumers. That I can assure you is what we are doing,” he told Accra-based Joy News.