In a massive turn of events amounting to what can be described as relief for households and businesses across Ghana, the Public Utilities Regulatory Commission (PURC) has delivered a decisive verdict in the 2026-2030 Major Tariff Review.
The commission has rejected the massive tariff demands proposed by utility companies, settling for considerably lower rates, although some Ghanaians still have agitations.
It will be recalled that the two utility companies, the Ghana Water Company and the Electricity Company of Ghana (ECG), in September this year submitted proposals to the PURC demanding hefty increases in tariffs.
The ECG requested a whopping 225% increase in its distribution service charge. The Ghana Water Company, on the other hand, requested a relatively higher increase. GWCL requested a 281% increase in water tariffs. These requested if granted, would have pushed bills up by shocking margins.
However, PURC has stepped in, playing the role of the consumer’s financial guardian. The final approved rates are modest compared to the utilities’ initial proposals:
• Electricity will increase by 9.86%.
• Water will see an upward review of 15.92%.
The Reasons Behind the Cuts
The following factors were considered in the decision-making process, ensuring the approved rates were realistic, sustainable, and protected consumer interests:
Prioritizing Consumer Protection and Affordability: The Commission explicitly stated that its major review considered the general living conditions of consumers. The final natural gas adjustments aim to maintain the real value of the tariffs while protecting the interests of consumers. This regulatory mandate acts as the primary barrier against excessively high tariff demands.
Stringent Review of Financial Needs (CAPEX and OPEX): The review process rigorously examined both Capital Expenses (CAPEX) and Operational Expenses (OPEX) submitted by the service providers.
The Commission evaluates the regulated asset base of the utilities to ensure that the tariffs only allow the utilities to meet necessary investment requirements.
Adjusting Macro-Economic Variables: The PURC did not simply accept the utility providers’ assumptions regarding future economic conditions. Instead, the Commission applied its own approved forecasts for critical variables, which substantially lowered the required revenue. Factors considered and adjusted downward include:
For the Inflation Rate, the PURC factored in an approved inflation rate of 8.00% for the 2026-2030 MYTO period, a significant reduction from the existing rate of 12.43%.
For the Exchange Rate: The approved exchange rate for the period was set at GHS/US$12.0067, compared to the existing rate of 12.371. Controlling these inputs prevents utilities from setting future tariffs based on overly pessimistic or speculative currency and inflation forecasts.
Controlling Operational Costs (Fuel Mix): For electricity, the PURC reviewed the utility’s proposed generation mix (hydro, thermal, renewables) and the expected Weighted Average Cost of Gas (WACOG). By controlling assumptions related to these volatile costs, the Commission ensures utilities do not pass on projections that exceed reasonable cost recovery benchmarks.
Focus on Efficiency and Regulatory Benchmarks: The PURC pledges to continue to hold service providers to strict adherence to the Commission’s regulatory standards and benchmarks. This emphasis on efficiency means that costs arising from poor performance (like excessive system losses) cannot be fully passed on to consumers.
◦ For example, the review looked at System Losses for electricity distribution, approving 21.5%.
◦ For water, the Commission tracked Non-Revenue Water (NRW), which reached an approved rate of 47.14%.
While the PURC allows for cost recovery, the regulatory process scrutinizes these efficiency metrics, implicitly denying requests that seek to fund operational waste.
The Bottomline
The massive reduction was not a random move, but the result of a stringent and humanized regulatory process.
The PURC explained that its decision was based on finding a delicate balance of ensuring utilities can continue to operate and invest in vital infrastructure, while protecting citizens from crushing bills.
