If the government fails to subsidize power tariffs, users would face a 148 percent rise in light bills starting in August 2022, according to the Electricity Company of Ghana.
According to a suggestion filed by the Public Utilities Regulatory Commission (PURC), the adjustment should be made between 2019 and 2022.
To pay Distribution Service Charges, the ECG has recommended an average rise of 7.6% in price for the next four years (DSC).
The large rise in Distribution Service Charges, according to ECG, is due to a growing disparity between real cost recovery tariffs and PURC authorized prices, as well as the cost of completed projects.
It also addressed the influence of macroeconomic variables like inflation and exchange rate volatility, as well as the continuation of the current tariff (which was 14 percent lower) beyond the regulated term.
"The consequence of ECG's tariff plan for the next five years is a roughly 148 percent raise over the existing DSC1 in 2022, with an average annual increase of 7.6% from 2023 to 2026." The large rise in the DSC1 for 2022 might be attributable to the growing disparity between actual cost recovery rates and PURC approved prices, as well as the cost of completed projects."
"Similarly, ECG's planned DSC2 indicates a bigger rise of 28.4 percent in the first year (2022), with successive years' increases averaging 2% from 2022 to 2026," it continued.
The power distributor emphasized that its financial viability is critical since it affects the whole energy industry.
Advertisement Report
"The financial viability of Ghana's Electricity Company is critical since it affects the whole energy industry. With the distribution industry's massive investment demands over the next five years, it's predicted that the proposed price hikes would undoubtedly be authorized to maintain efficient and dependable electrical delivery."
"To cover distribution costs, the DSC will need to climb continuously (average of 7.6%) for the following five years." The authorized BGC is expected to align with the contractual conditions of PPAs (Power Plant Agreements)," it noted.
ECG suggests a streetlight price that covers all costs.
However, the ECG suggested that the PURC be involved in determining the established level for a reduced rate for non-residential or commercial consumers.
The corporation also wants the government to support the introduction of a streetlight tariff, which would allow it to account for the entire cost of streetlight use. It also expects the government to help it stay afloat financially by covering all costs linked with excess capacity charges.
Targets for Service Delivery and Efficiency
In terms of revenue growth, ECG anticipates a 98 percent revenue objective and a 10% rise from non-tariff income streams such as reconnection fees, application fees, penalties on dishonored checks, and administrative costs on unlawful connections, among others.
"ECG also wants to use prosecution processes to help increase revenue collection over the term," it said, adding that it will purchase additional smart meters to boost revenue growth.
blogpay
