THE Public Utility Regulatory Commission (PURC) is bent on implementing with effect from next year, what it terms, the Automatic Adjusting Formula (AAF) where utility tariffs will be reviewed every quarter as against the one-time rise.
Meanwhile, a meeting between the PURC and the Trades Union Congress (TUC) meant to finalise the modalities before the implementation of the AAF is yet to be convened according to the unionised workers.
Speaking in separate interviews in Accra on the matter, the Senior Public Relations and External Affairs Manager of the PURC, Nana Yaa Akyepim Jantuah, said the implementation of the new formula was meant to ensure that adjustments in utility tariffs was done regularly to avoid the inconveniences the one-time payment brought to consumers.
She explained that the tariff would be calculated based on the Consumer Price Index (CPI), price of crude oil on the international market, exchange rate between the cedi and other major international currencies, and the generation mix (the cost of hydro generation as against thermal). All these factors, she said would act to determine the rise, fall or no changes to utility tariffs in the country after every quarter.
Nana Jantuah said when implemented, "the AAF would reduce the burden that the one-time increases had on the financial integrity and viability of the utility companies".
On its benefits to the industrial and business community, Nana Jantuah said "the AAF will help them budget since they will know that utility tariffs will be reviewed after every quarter".
According to her, the Association of Ghana Industries (AGI) had welcomed the move as a good initiative.
Nana Yaa Jantuah further told the Graphic Business that the AAF was abandoned in 2006 for the one-time adjustment formula, a move she said was "to enable the PURC know the actual cost of production and distribution by the utility companies and also to interrogate the figures in their respective proposals".
She noted that while announcing the last adjustments in utility tariffs on May 30, 2010, the PURC made it clear that it would reverse to the AAF.
As a result, she said the PURC had been engaging the various stakeholders on consultations as to the modalities to follow in implementing the formula.
She, however, noted that the commission's reversal to the AAF did not mean that the commission was doing away with the one-time adjustment formula.
As to whether or not the AAF will cause the utility companies to compromise on the quality of service provided, the Senior Public Relations and External Affairs Manager of the PURC said "no".
She, however, called on Ghanaians not to hesitate to report to the commission, poor service rendered to them by the utility providers.
The commission, she said "has over the years awarded costs against some of the utility companies based on complaints filed against them by private individuals and other groups".
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| Kofi Asamoah, TUC's Secretary General |
For his part, Mr Kofi Asamoah, the Secretary General of the TUC, said the union was waiting for the PURC to discuss the modalities of the formula with it before any comment could be fully made on the matter.
On complaints by the utility companies about lack of funds to enable them improve their services, Mr Asamoah said "that is neither here nor there; They should not throw their hands in despair but rather find solutions to their problems".
Over the years, tariff adjustments under the One-time Adjustment formula normally followed proposals by the utility companies for specific percentages which were sometimes slashed by the PURC.
The last review on May, 2010, which was the first in three years, was met with series of agitations and calls from industry and the business community for a downward review.
Before then, the utility companies had proposed a 154 per cent increment in the tariffs to enable them cover cost of production.
In response, the PURC, however, slashed the rate to 125 per cent; with 89 per cent being for electricity and 36 per cent for water but that did not go down well with industry, business organisations and ordinary consumers.
As a result, the Association of Ghana Industries (AGI), the Chamber of Mines, Trade Union Congress (TUC) and other groups as well as individuals called for a downward review of the tariffs.
This later caused the government to apply a total subsidy of Gh¢115million to all electricity consumers after it had earlier absorbed Gh¢48million as subsidy.
It also set up a technical committee to consider these concerns and further ordered the PURC to engage the various stakeholders to negotiate on the way forward.
Mr Asamoah also called on the utility service providers to improve on their services saying "the inefficiency of the service is now worst, especially with ECG".
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