According to the Institute for Energy Security (IES), if the Public Utilities Regulatory Commission (PURC) had not been overly cautious with the contribution of hydro power, which is the cheapest source in the energy mix, electricity consumers could have been spared the burden of having their tariffs increased by as much as 30 percent.
The energy research group argued that the degree of increase in end-user electricity bills announced this week by the regulator was influenced by the PURC’s projection that hydro will make up 26.11 percent of the power generation mix.
According to their prediction, which differs from the PURC’s, water elevations for the generating stations (GS) at Bui and Akosombo have improved and will be able to produce close to 38% of the country’s electricity in 2023. According to the IES, this should have significantly cut the rate consumers were required to pay starting in February.
Although the IES predicted that the average electricity end-user tariff (GH/kWh), which covers residential, non-residential, and special load tariff electricity consumers, would increase within the year, the IES predicted that the increase in tariff would only be marginal if more hydroelectric power was produced as part of the generation mix.
According to IES, if the PURC decides to continue using the 26.11 percent hydro-thermal and 73.89 percent thermal electricity generation mix for 2023 as the foundation for the high tariff increment, it would be actively promoting inefficiency and unfairly burdening Ghanaians with high electricity costs.
The end-user tariff increase for electricity to all consumer groups was informed by other factors, including cedi depreciation, inflation rates, and the Weighted Average Cost of Gas (WACoG), but it disagreed with the generation mix factor, which was set at 26.11 percent for hydro and 73.89 percent for thermal.