The Public Utilities Regulatory Commission (PURC), will have no basis to reject calls for a reduction in electricity tariffs as long as the factors that determine the cost of generation in the electricity power mix have seen a drastic change.
That’s according to a Research and Public Policy Think Tank, CUTS Ghana, which has officially petitioned the regulator to consider a reduction in electricity tariffs.
Country Director of CUTS Ghana, Appiah Kusi Adomako, told Citi Business News the falling crude oil and gas prices are enough justification for a reduction in power tariffs.
“Asking for tariff reduction is not based on the current global condition we find ourselves in with the virus, but rather the input cost and the generational materials that are used to power the power mix. About two-thirds of our energy mix comes from thermal, and thermal is powered by gas or crude oil. In the past, PURC had maintained that because of the rising price of crude, utility prices had to go up, and now that there have been a substantial fall in input materials, we equally expect that the Commission will reduce the tariff downwards to serve for the interest of consumers.”
“Last year July, when PURC approved the current tariff regime, they used 3.08 metric cubic tonnes for the weighted average of gas, and currently the price of gas is about 1.7. So, also the price of crude. When the tarrifs were reviewed, crude price was around 73 dollars or so, but now it has come down to about 20 dollars per barrel,” he added.
The Think Tank stated that, 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.
“The request for tariff review comes from utility providers, that is GRIDCO, ECG and NEDCo. But because this time they are making a windfall they have kept quiet. So if consumers of electricity also keep quite it means that the PURC on its own will not intervene. And so, it’s a very good proposal that we sent to the PURC on Friday asking them to review the tariff based upon these determinants.”
“I don’t think on the basis of these facts, PURC can do anything other than what we have asked because if you look at even the price of fuel that we pay at the pump it has gone down almost every week. So, PURC is not a different regulator compared to NPA and other regulators. So they are morally bound to do that,” he said.
In an earlier call, the Think Tank petitioned 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 as a reduction in the tariffs would help businesses and consumers who would have been affected heavily by the coronavirus pandemic.