The Electricity Company of Ghana (ECG) will soon review its tariffs every three months, an official of the company told City & Business Guide in an exclusive interview in Accra. Mr Ebenezer Baiden said the tariff review could either see light bills going up or down, depending on the cost of power production. “We are adopting automatic adjustment formula in rate setting which will see periodic reviews of tariffs every three months. What this means is that instead of waiting for a year before increasing electricity tariff, we proposed that a transitional plan be put in place whereby tariff adjustments will be done gradually until it reaches the full recovery level. This system is similar to the one adopted formerly by the National Petroleum Authority,” he explained. According to Mr Baiden, the regulator of the utility industry, Public Utilities Regulatory Commission (PURC), is currently reviewing the automatic adjustment formula, adding that by principle, the commission has given the ECG the go-ahead to implement it. He believes the tariff adjustment is needed to upgrade and improve the distribution facilities of ECG whose lifespan has been shortened due to the repetitive switching on and off during the recent national load shedding exercise. “We need a tariff adjustment to expand the distribution facilities and give access to more Ghanaians who currently do not have access to electricity supply,” the company explained. The automatic adjustment formula was introduced in October 2003 in order to help project electricity tariffs gradually to full cost recovery level. Unfortunately, the automatic adjustment formula was not robust enough to move the tariff (especially the Distribution Service Charge) to full cost recovery levels and therefore it was abandoned after February 2005. Meanwhile, the three electric utility companies which agreed to sacrifice their revenue so that electricity consumers would pay less have called on government to honour its side of the bargain and fulfill their conditions for the review. In a joint statement, the Volta River Authority, Ghana Grid Company and the Electricity Company of Ghana explained that the downward review has been possible because of the current stability in the exchange rates, reduction in inflation and the expected flow of natural gas from the West Africa Gas project. It stated that this means a reduction in the cost of generation and associated reduction in transmission and distribution costs. The three companies however reiterated that the subsidy is subject to implementation of the automatic adjustment formula in rate setting which would see periodic reviews of tariffs every three months. “The main parameters that influence the cost, that is the hydro/thermal mix, inflation, exchange rate and fuel price, will be reviewed for the tariff to be adjusted accordingly,” the statement added. Source: Daily Guide