The Public Utilities Regulatory Commission (PURC) has attributed the latest increase in electricity and water tariffs largely to exchange rate pressures, despite a decline in inflation and stable electricity generation levels.

PURC, on June 22, announced an upward adjustment in electricity and water tariffs. Electricity tariffs have been increased by 3.49%, while water tariffs have gone up by 0.85%. The new rates will take effect from July 1, 2026.

According to the Director of Research and Corporate Affairs at the PURC, Dr. Eric Obutey, the marginal depreciation of the Ghana cedi against the US dollar was the key factor that informed the Commission's decision to adjust utility tariffs for the third quarter of 2026.

Speaking in an interview on JoyNews' The Pulse on Tuesday, June 23, Dr. Obutey explained that four key variables are considered in the Commission's quarterly tariff review process.

“Exchange rate alone contributes about 60 per cent of the tariff. In the major tariff review, we take into account both capital expenditure and operational expenditure. However, in the minor tariff review, which is conducted quarterly, we consider only operational expenses,” he explained.

He noted that while inflation had declined and the generation mix between hydro and thermal power remained unchanged, movements in the exchange rate necessitated an upward adjustment.

“If you look at it, inflation has dipped and the generation mix has remained the same, but the cedi has depreciated marginally against the US dollar. That contributed to the change in tariffs,” Dr. Obutey stated.

As a result, electricity tariffs have increased by 3.49 per cent, while water tariffs have gone up by 0.85 per cent.

Balancing Cost Recovery and Consumer Welfare

Dr. Obutey stressed that tariff determination is not based solely on economic calculations but also takes into account prevailing social and economic conditions.

“Tariffs are both an art and a science. The science may tell you that one plus one equals two, but we also consider the social realities. The commissioners may decide that even though the calculations point to a certain figure, the living conditions of consumers must be taken into account,” he explained.

He said the Commission believes the current adjustment strikes a balance between ensuring the financial sustainability of utility providers and protecting consumers from excessive increases.

The PURC official further revealed that there had been an under-recovery in the exchange rate used in previous tariff calculations.

According to him, the Commission used an exchange rate of GH¢11.19 to the dollar in calculating second-quarter tariffs, compared to GH¢11.22 for the current quarter.

“There is an under-recovery because the figure we used is lower than what pertains on the market. We therefore need to recover that difference. That is why the depreciation of the cedi against the dollar has been reflected in the new tariffs,” he said.

Dr. Obutey expressed confidence that the 3.49 per cent increase in electricity tariffs would enable utility service providers to meet their operational costs over the next three months.

“By making this adjustment, we believe the utilities will be able to cover the cost of running their operations over the next quarter,” he added.

The latest tariff review forms part of PURC’s quarterly adjustment mechanism, which seeks to account for fluctuations in key economic indicators while maintaining a balance between cost recovery for utility providers and affordability for consumers.