Els: MBN360 News
The NPP Communications Member and Energy Expert, Kwadwo Poku has questioned the methodology used by the Public Utilities Regulatory Commission in approving the latest electricity tariff adjustment. Mr. Poku argued that inconsistencies in the pricing framework have raised doubts over the basis for the increase.
The NPP Communications Team Member explained that PURC has alternated between forward projected rates and historical data in calculating the projected weighted average for tariff reviews. He stated that each approach carries implications for consumers, especially when economic volatility remains high.
Discussing the methodology, Mr. Poku noted that the forward rate model can overestimate future pressures and impose higher costs on consumers. In addition, he indicated that reliance on historical data may also fail to capture future market realities, creating further uncertainty in tariff determination.
Analysing the key variables used in PURC’s calculations, he identified the cedi to dollar exchange rate, inflation, WAGOG fuel cost, generation mix and under recovery adjustments as the major indicators influencing electricity pricing.
Mr. Poku further stated that under recovery adjustments are often added to consumer bills to recover previous losses within the sector. He observed that over recoveries have rarely been used to provide relief to consumers, despite periods where such room existed.
“The parameters used in tariff determination must be consistent and transparent. Consumers deserve to understand why they are paying more and whether those calculations truly align with economic conditions.”Kwadwo Poku
In addition, the energy expert questioned why a projected 0.2 percent exchange rate movement should trigger a 3.5 percent tariff increase. He argued that if macroeconomic stability is genuinely improving, the exchange rate pressure cited by PURC should be manageable.
Mr. Poku also challenged claims of economic stability often advanced by the ruling National Democratic Congress. He asserted that confidence in the economy should translate into stable utility pricing and stronger policy predictability.
He added that the Bank of Ghana should be able to provide guarantees to support utility operators if foreign exchange reserves remain strong. The NPP Communications Team Member emphasised that stronger coordination between regulators and monetary authorities could ease pricing pressure on consumers.
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Electricity Tariff Hike Risks Fresh Inflationary Pressure
The NPP Communications Team Member warned that the proposed electricity tariff increase could trigger wider inflationary pressure across the economy. Mr. Poku stated that higher utility costs would quickly affect production expenses and consumer prices.
Addressing the economic outlook, he argued that global fuel market trends currently favour moderation in domestic costs. He noted that crude oil prices have eased following tensions involving Iran, United States and Israel, creating room for relief in petroleum pricing.
The emphasis rests on the timing of the tariff adjustment, which he described as poorly aligned with the economic conditions. He pointed out that fuel prices are already expected to decline, while gas prices have also recorded reductions.
Mr. Poku stated that a 3.49 percent increase in electricity charges at this stage could weaken gains in inflation management. He explained that industries would likely pass increased utility costs onto consumers through higher product prices.
“A 3.49 percent increase may appear small on paper. The real burden emerges when industries transfer that cost into goods and services across the market.”Kwadwo Poku
In light of this, he urged government to postpone the tariff adjustment until the fourth quarter. He argued that delaying implementation would allow authorities to assess actual market performance and under recovery figures with greater clarity.
Additionally, Mr. Poku said a temporary freeze would offer households some financial breathing space as petroleum prices decline. He suggested that consumers would be better positioned to absorb future adjustments if broader economic relief materialises.
The NPP Communications Team Member also referenced calls from civil society groups and the New Patriotic Party minority supporting a suspension of the increase. He described that position as practical and responsive to prevailing economic realities.
“The government should hold off on this increase for now. A clearer economic picture after the mid year budget will support a better decision.”Kwadwo Poku
Mr. Poku further disclosed that engagement with PURC officials is expected in the coming days to discuss standardisation of tariff methodology. He indicated that transparent calculations and predictable regulatory standards remain essential for public trust and long term energy sector stability.
