PURC cites currency depreciation, inflation in electricity tariff adjustment

The Public Utilities Regulatory Commission (PURC) has provided a detailed explanation for the recently announced 1.14% increase in electricity tariffs and the decision to keep water tariffs unchanged for the fourth quarter of 2025.

Dr. Eric Obutey, Director of Research and Corporate Affairs at the PURC, stated that the upward adjustment in electricity tariffs was driven primarily by movements in two key economic indicators: the exchange rate and inflation.

According to him, PURC uses four main variables in its quarterly tariff reviews:

1. Exchange rate,
2. Inflation,
3. Weighted Average Cost of Gas (WACOG), and
4. The power generation mix between hydro and thermal sources.

“For the fourth quarter, we maintained the generation mix at 28.8% hydro and 71.2% thermal, as well as the WACOG figure of $7.71 per MMBtu,” Dr. Obutey explained on the Channel One Newsroom on Wednesday September 24.

However, the exchange rate and inflation did change. The exchange rate moved from GHS10.70 per $1 in the previous quarter to GHS12.37 per $1 for the current period.

“That depreciation caused an under-recovery in the previous quarter that had to be recouped to maintain the real value of the tariff,” Dr. Obutey said. “This allows the utility providers to continue their operations effectively.”

He emphasised that the 1.14% increase was necessary to ensure that the tariffs reflect current economic realities and support the financial sustainability of the utility companies.

On water tariffs, Dr. Obutey explained that although calculations showed a 0.1% increase would have been appropriate based on the same economic factors, the Commission chose to maintain the existing tariff.

“When we did the computation, we realised that the marginal change for water would have been just 0.1%. But in the wisdom of the commissioners, they felt there was little difference between 0.1% and 0%, and so decided not to increase the water tariff at all,” he said.

This means consumers will not experience any change in water bills for the fourth quarter, while electricity bills will see a modest increase starting October 1, 2025.

The tariff adjustment falls under PURC’s Quarterly Tariff Review Mechanism, which was introduced to ensure that utility tariffs remain fair, transparent, and responsive to macroeconomic conditions that are beyond the control of utility service providers.

“These reviews help protect both the interests of consumers and the financial sustainability of utility companies,” the Commission said in a previous statement.

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