Power utilities need tariff increment - Energy analyst justifies

Energy Analyst and Lawyer, Omar Farouk has opined that it is essential for the economic regulator, Public Utilities Regulatory Commission (PURC) to increase electricity tariffs primarily to absorb the actual cost of power generation and distribution.

According to him, consumers are currently not paying inter alia for the cost of Reserve margin and the actual cost of power distribution among others.

Speaking in an interview with GhanaWeb, the energy analyst and lawyer explained that the Distribution Service Charge1 (DSC1) which is about 16 pesewas gives the power Distribution Utilities (DUs) an annual revenue of about GH¢1.6 billion when the opex component of their ARR is close to GH¢2.5 billion.

This means that the DUs are not able to meet their annual opex.

Owing to this, Omar Farouk further explained that the DUs in the country are making a negative return on their Regulated Asset Base (RAB), when they should rather be getting positive returns.

“This means that whatever investment they’ve made in constructing the network to enable them to offtake power from the Network Integration Transmission Service (NITS) ought to be recovered because they were largely financed with debt cost of which they ought to pay for and this ideally is supposed to be passed onto the consumer,” Omar Farouk pointed.