Tariff Setting Guidelines
Pursuant to its statutory responsibility, PURC has a Tariff Setting Guideline which guides the Commission, utility companies and other stakeholders as a transparent basis for setting rates for both electricity and water. Guidelines are currently being developed in respect of natural gas services. In preparing the Guidelines, the Commission is enjoined by statute to take the following into account:
- Consumer interest;
- Investor interest;
- The cost of production of the service;
- Assurance of the financial integrity of the public utility
Procedure for Approving Tariffs
Tariff review proposals are submitted by the Utility Service Provider 60 days before the effective date of the new tariffs. PURC interrogates the proposals and if need be requests from the utility companies such information as may be necessary before arriving at a final tariff decision.
As a measure towards including public input into the tariff decision making process, the utilities are mandated to publish their proposals in the public media.
Subsequent to the publication, nationwide Public Hearings are held at which the utility company presents its proposals to the public and various interest groups. The contributions and comments from the Public Hearings are taken into account by the Commission in arriving at the final tariff decision. PURC must by law make the tariff decision within 30 days of receiving all the necessary information from the utility company regarding the tariff review.
PURC’s policy is to institute an efficient tariff regime that ensures reasonable rates which assure the financial integrity of the Public Utilities. During the major tariff review in 2010, the Commission incorporated the Automatic Adjustment Formula (AAF), which was, implemented quarterly (February – April; May – July; August – October; and November – January). The aim of the AAF was to sustain the real value of the tariffs by adjusting it, based on variations in factors such as:
- Fuel Price (light crude oil, natural gas, etc)
- Foreign Exchange
- Generation (Hydro – Thermal) Mix
In consonance with Government of Ghana’s Poverty Reduction Strategy (GPRS), PURC has maintained its policy of instituting lifeline tariffs for low income consumers with significantly low consumption levels. The lifeline tariff continues to be provided at below the cost of electricity provision.