Delay In Utility Tariff Announcement Causing Anxiety Amongst Businesses-ACEP

The Africa Centre for Energy Policy (ACEP) has described as worrying delay by the Public Utilities Regulatory Commission (PURC) in communicating its decision on new tariff, which is expected to take effect from 1st July, 2019, following the mandatory major tariff review consultations in January this year.

“ACEP’s interactions with key consumers of electricity show that anxiety is already high within the business community and expect the Commission to be fully sensitive to the realities on the ground in order not to inject unnecessary shock into plans of consumers and, by extension, the economy,” a statement signed by Benjamin Boakye, Executive Director of ACEP and copied to energynewsafrica.com noted.

The Commission, earlier this year, postponed its decision to announce a new tariff for utilities to the end of June 2019, for it to take effect from July 1.
This was as a result of some critical emerging issues in the sector, which were expected to affect the final tariff setting.

The shift in the effective date of the major tariff was, therefore, to allow the Commission to accommodate the important variables it expected would influence the tariff.

The practice, according to ACEP, has been that new tariffs are
announced, at least, two weeks prior to the effective date.
This is necessary to allow stakeholders to adjust their systems and budget to accommodate the new tariff.

ACEP, by this, called on the Commission to communicate to consumers what its intentions are, as to whether it would extend the effective date of the tariff, or immediately announce the new tariff to allow consumers time to absorb and adjust to the changes.
Below is the full statement

PURC MUST COMMUNICATE ITS ELECTRICITY TARIFF NOW, IF THE 1ST JULY EFFECTIVE
DATE IS STILL RELEVANT.

Press release,

Accra, 19th June, 2019.

The Africa Centre for Energy Policy (ACEP) is worried about the delay by the Public Utilities Regulatory Commission (PURC) to communicate the tariff which the Commission announced in February would take effect from 1st July 2019, following the mandatory major tariff review consultations in January this year.

In a press statement issued on 27th February 2019, the Commission stated that its decision to postpone the announcement of the tariff to July was “… due to critical emerging issues in the sector which are expected to affect the final tariff setting.

Amongst others, the emerging issues are related to the planned relocation of the Karpowership Plant resulting in fuel switch savings from Heavy Fuel Oil (HFO) to Natural Gas. Secondly, reductions in the price of natural gas are anticipated due to ongoing negotiations by government. These matters are outside the purview of PURC but their outcomes are likely to have measurable impact on the Commission’s decision.”

The shift in effective date of the major tariff was therefore to allow the Commission to
accommodate the important variables it expected would influence the tariff.
The practice has been that new tariffs are announced at least two weeks prior to effective date. This is necessary to allow stakeholders to adjust their systems and budget to accommodate the new tariff.However, today is the 19th of June (11 days shy of the proposed 1st July tariff effective date), yet the tariff has not been announced.

ACEP does not expect the Commission to, within few days to the effective date, ambush electricity consumers with the new tariff which holds about 90% chance of upward adjustment. This is because doing so potentially distorts the plans of consumers significantly, particularly the business community whose investment decisions have been held hostage by the uncertainty in the expected tariff adjustment level.

ACEP’s interactions with key consumers of electricity show that anxiety is already high within the business community and the Commission to be fully sensitive to the realities on the ground in order not to inject unnecessary shock into plans of consumers and, by extension, the economy.

ACEP therefore calls on the Commission to communicate to consumers what its intentions are, as to whether it will extend the effective date of the tariff or immediately announce the tariff, to allow consumers time to absorb and adjust to the changes, whatever that may be.