New electricity and water tariffs are expected to be announced today by the Public Utility and Regulatory Commission (PURC), regulator of the country’s utility sector, the Business Guide newspaper reports. The paper says a reliable source told it in an exclusive interview in Accra Monday that the new tariffs would be announced during the launch of the Automatic Adjustment Formula, which is slated for today February 15, 2011 at the College of Physicians and Surgeons in Accra at 1.00 pm. As to whether the new tariffs would be adjusted upwards or downwards, this paper cannot tell. The Automatic Adjustment Formula will seek to review utility tariffs on a quarterly basis in order to address movements of external factors that affect water and electricity tariffs in the country. Meanwhile, a statement issued by the PURC Monday and signed by Nana Yaa Jantuah, Senior Public Relations and External Manager, said: “The Public Utility and Regulatory Commission after careful consideration of key variables and indicators of the Automatic Adjustment Formula, has decided to implement this tariff adjustment mechanism.” Last week, officials of PURC met the leaders of the Greater Accra Market Association to educate them on the new utility tariff system. The Senior Manager in charge of Regulatory Economics and Research at PURC, Eric Obutey told traders who gathered at the Accra Metropolitan Assembly (AMA) that under the new system of tariff review, light and water bills could either go up or down in every three months 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. The main parameters that influence the cost is the hydro/thermal mix, inflation, exchange rate and fuel price, which will be reviewed for the tariff to be adjusted accordingly,” Mr. Obutey added. What this means is that with the automatic adjustment formula in place, utility tariff adjustments will be done gradually until it reaches the full recovery level instead of waiting for a year before increasing electricity or water tariffs. This system is similar to the one adopted previously by the National Petroleum Authority (NPA), which until recently was reviewing petroleum prices every two weeks depending on the prices of the commodity on the international market. The automatic adjustment formula was introduced in October 2003 in order to help project electricity tariffs gradually to full cost recovery level. Unfortunately, the formula was not robust enough to move the tariff, especially the Distribution Service Charge, to full cost recovery levels hence its abandonment since February 2005. PURC in June last year, increased tariffs for the residential class of electricity customers, which ranges between zero and 42 percent depending on consumption and between 21 and 32 percent for Ghana water consumers. Source: Business Guide/Ghana