The Impact of the Electricity Tariff Reduction on the Bill of Consumers

The recent electricity tariffs announced by the Public Utility Regulatory Commission (PURC) continues to generate discussion on the true impact of the reduction on the electricity bill of consumers. The PURC announced an average tariff reduction of 17% and 30% for residential and nonresidential consumers respectively.

This analysis looks at the overall impact of the tariff reduction on the electricity bill for the various category of consumers. This has been possible following the release of the reckoner by the Electricity Company of Ghana (ECG) and the gazetted tariffs subsequent to earlier announcement by the PURC.

Impact of the tariff reduction on the cost of electricity.

ACEP’s analyses show that the 17% average tariff reduction for residential consumers will have an average effect of 14% reduction on their bills whiles the 30 % tariff reduction for commercial consumer will have an average effect of 23% bill reduction. This is because the impact of the tariff reduction on the bill of consumers depends on government interventions through levies and taxes, either new or existing, and service charges approved by the Commission. It is also important to stress that the impact varies significantly depending on the consumer’s consumption band.

Figure 1 below shows the comparative trends of electricity tariff since 2015. Electricity cost to residential and non-residential consumers have declined in 2017 and 2018, but the extent of decline is greatest in 2018. From 2018, residential consumers will experience significant bill reduction as more electricity is consumed. The actual effect for residential consumers ranges from 8% reduction in electricity bills for those immediately transitioning lifeline band of 50 units to 17% for heavy consumers. Figure 1: comparative analysis of the cost