The Public Utilities Regulatory Commission (PURC) has received a proposal the Volta River Authority (VRA) requesting a significant adjustment in its Bulk Generation Charge (BGC).

VRA is seeking a 59 percent increase to cover rising costs of producing electricity. If approved, the current tariff of 45.0892 Ghana pesewas per kilowatt-hour will be raised to 71.8862 pesewas per kilowatt-hour.

Speaking during a public hearing on Tuesday, September 9, Senior Economic Analyst at VRA, Evans Somuah Mensah, said, “Over the years, VRA has not been compensated for doing this work to assist the national connectivity system. We are saying that on an annual basis, VRA should be given compensation $30.49 million for Akosombo power generation, and Kpone Thermal plant, a little bit of $30,000.

“Justification for tariff increase, we are saying that we want to recover the cost of our power supply to the distribution companies, and recover the cost of transmission and also be compensated for the provisions of ancillary services. We are requesting the PURC to increase the existing tariff of BGC from 45.0892 Ghana pesewas per kilowatt-hour to 71.8862 Ghana pesewas per kilowatt-hour.”

The Authority has justified the increase as necessary to fully recover the cost of power generation supplied to distribution companies (DISCOs). It has noted that sustaining reliable electricity generation and meeting its operational and financial obligations will become increasingly difficult if its proposal is kicked out.

Other distribution utilities, such as the Electricity Company of Ghana (ECG) have proposed a charge of 55.7671 pesewas per kilowatt-hour, the Northern Electricity Distribution Company (NEDCo) is seeking 92.7333 pesewas per kilowatt-hour, while the Enclave Power Company Limited (EPCL) has submitted the highest request, proposing 147.1775 pesewas per kilowatt-hour.The proposed hikes, if approved, would raise electricity tariffs for households and businesses. The ECG’s proposal for the 2025–2029 tariff period demands a massive 225% hike in its distribution service charge, citing currency depreciation and rising operational costs.

As part of the ECG’s request, the current charge Distribution Service Charge (DSC) of 19 pesewas should be raised to nearly 62 pesewas per kilowatt-hour. The adjustment, if approved, will be implemented in October this year.

“The PURC will undertake the major adjustment in the 4th quarter of 2025 to reflect capacity charges, additional liquid fuel usage and additional capex. The current charge is below industry benchmarks, cedi depreciation has reduced its value. US$408m spent on network upgrades and smart meters,” parts of ECG’s petition read.

As a result, the more electricity consumers use, the greater the additional cost they will bear under the proposed increase. For instance, a household consuming 150 kWh monthly would pay an additional charge of GHS64, while a residence using 100 kWh per month would pay about GHS43 more in distribution charges.

ECG has emphasised that the adjustment has long been overdue, noting that in 2022 it proposed 39.95 pesewas, but only 19.04 pesewas was approved. According to ECG, it has invested $48 million in network upgrades and smart metering systems to enhance power reliability, reduce outages, and align tariffs with international industry standards, yet these efforts have not yielded the expected cost recovery.

Furthermore, ECG has projected an annual revenue of GHS9.5 billion between 2025 and 2029 if the new charges are approved. The proceeds, according to the utility company, would be allocated to cover operational costs, depreciation of assets, staff salaries, and the recovery of recent capital expenditures.

In the meantime, the onus lies on the PURC to carefully review the request, assess whether the increase is justified, and determine how the cost will be distributed. In July this year, electricity tariffs increased by 2.45% across board with no increase in water tariffs.

The adjustments according to PURC, was carried out in line with the Commission’s Quarterly Tariff Review Mechanism, tracks and incorporates movements in key factors which are beyond the control of the Utility ServiceProviders (USPs), namely the exchange rate between the US$ and the Ghana Cedi, domestic inflation rate, the electricity generation mix, and the cost of fuel, mainly natural gas.

According to the Commission, the factors it took into consideration before concluding the hike in tariffs include the exchange rate, inflation rate, price of natural gas, electricity generation mix, outstanding debt of GHC488 million carried over from the previous three quarters.

The others are reserve capacity for grid stability and reliability, as well as inclusion of 27% of the cost of alternative fuels such as Distillate Fuel Oil (DFO), Heavy Fuel Oil (HFO) and Light Crude Oil (LCO).

The Commission expressed gratitude to stakeholders for their support as it continues to implement the Quarterly Tariff Reviews per its Rate Setting Guidelines to address changes in operational conditions of the service providers.

Majority Leader Mahama Ayariga justified the Public Utilities Regulatory Commission's (PURC) decision to increase electricity tariffs. Speaking on the floor of Parliament on Friday, June 27, the Majority Leader noted that there is a need for the Electricity Company of Ghana (ECG) to be able to settle its growing debt.

"You all know that the whole of last year and before that, there was an effort to prevent the PURC from adjusting the tariffs. So that whole period, there was no adjustment, and you know very well that bills were accruing; payments have to be made.ECG is accumulating huge [debt] and it has to be paid, so who is supposed to pay? Is it not the consumer?" he questioned.

According to him, failure to address ECG's indebtedness would render the company powerless in supplying power to its consumers.

"And if you are not adjusting the tariffs to enable ECG to pay, ECG is going to collapse. They are no longer able to buy the input needed to keep the generators on, and we are going to have a power outage; the bills have to be paid."

"The bill has to be paid. So if PURC is doing its work, I do not think there is a basis for saying that because we have improved the economy, it doesn’t mean that the debt at ECG will just be whisked away. The bill has to be paid partly by consumers," he asserted.