Do not ambush consumers with new tariffs – ACEP to PURC

The Africa Centre for Energy Policy (ACEP) has advised the Public Utilities and Regulatory Commission (PURC) not to ambush customers with new upward tariff adjustments, because it could potentially distort customers’ plans significantly.

In a statement titled ‘PURC must communicate its electricity tariff now, if the 1st July effective date is still relevant’, the think-tank argues that it does not expect the PURC to, within few days to the effective date, ambush electricity consumers with the new tariffs – which it said hold about a 90 percent chance of an upward adjustment.

Should the tariffs be announced few days to the effective date, it said, it would destabilise the plans of consumers greatly – particularly the business community whose investment decisions have been held hostage by the uncertainty in expected tariff adjustment level.

“ACEP’s interactions with key consumers of electricity show that anxiety is already high within the business community, and expects the Commission to be fully sensitive to the realities on the ground in order not to inject unnecessary shocks into plans of consumers, and by extension, the economy,” added the statement signed by its Executive Director, Benjamin Boakye.

ACEP expressed worry that despite the delay by PURC to communicate the tariff – which the Commission announced in February – it will take effect from 1st July 2019, following the mandatory major tariff review consultations in January this year.

A statement issued on February 27, 2019, by the Commission stated that its decision to postpone announcement of the tariff to July was due to critical emerging issues in the sector, which are expected to affect the final tariff setting.

Among others, the PURC statement said: “The emerging issues are related to the planned relocation of the Karpowership Plant, resulting in savings due to the fuel switch from Heavy Fuel Oil (HFO) to Natural Gas. Secondly, reductions in the price of natural gas are anticipated due to ongoing negotiations by government. These matters are outside the purview of PURC, but their outcomes are likely to have measurable impacts on the Commission’s decision.”

However, ACEP said, ideally, the Commission should communicate to consumers what its intentions are, and whether it will extend the effective date of the tariff or immediately announce the tariff.

This, the think-tank argues, will allow consumers time to absorb and adjust to the changes, and ultimately ease the anxiety within the business community.

“The practice has been that new tariffs are announced at least two weeks prior to effective date. This is necessary to allow stakeholders to adjust their systems and budget to accommodate the new tariff. However, today is the 19th of June – 11 days shy – yet the tariff has not been announced,” ACEP’s statement on Wednesday noted.