Explain basis for new tariff rates – IES to PURC
The Institute for Energy Security (IES) has questioned the assumption used by the Public Utility and Regulatory Commission (PURC) in establishing the new electricity tariffs that is to take effect on February 1, 2023.
IES believes the rates for the cedi/dollar exchange rate and inflation rates reflect market conditions among the four key variables.
The think tank, on the other hand, regards the PURC’s assumption on the electricity generation mix of 26.11% hydro and 73.89% thermal as invalid, stating “that assumption amounts to given priority to thermal power generation over hydro, given that water elevations for Bui and Akosombo generating stations (GS) have improved, and capable of producing close to 38% of power in 2023, in IES’ estimation
“Although the IES has anticipated that the average electricity end-user tariff (GH₵/kWh) covering residential, non-residential and special load tariff electricity consumers would see an increase within the year, the expected increase in tariff was anticipated to be marginal should more of hydro-electric power be produce from the generation mix.”
As a result, the energy think tank urged the PURC to reconsider the energy mix assumption used in the tariff adjustment to reflect improved water-head levels, as this affects the Weighted Average Cost of Gas, which has been revised to $6.0952/MMBtu from $5.9060MMBtu.
It believes that this will reduce the 29.96% tariff increase for all electricity consumer groups, providing some relief to already burdened citizens in the face of the current economic crisis.
“Should the PURC decide to maintain the 26.11% hydro-thermal and 73.89% thermal electricity generation mix for 2023 as the basis for the high tariff increment, that position would amount to promoting inefficiency and deliberately burdening the Ghanaian with high electricity cost,” it pointed out.
Further, it stated that data from Akosombo and Bui show that elevations at the start of 2023, compared to previous years, are in a better position to produce more electricity than thermals, and that “Bui’s water elevation is expected to help produce more megawatts to meet increasing electricity demand at particularly peak hours, and extended mega Vars to support voltage on the grid and help reduce transmission losses, if dispatched conservatively throughout the year.”
Consequently, the Institute agreed that the majority of capacity generation in 2023 would come from thermal sources if natural gas supply is maintained and planned plant maintenance schedules are strictly followed.
However, with improved water-head levels, hydropower generation is expected to produce nearly 38% of 2023 capacity if hydropower is given dispatch priority over thermal in the generation mix.
Source: Energy Ghana