Energy Crisis: VRA seeks 59% tariff hike to recover power generation costs
The Volta River Authority (VRA) has submitted a proposal to the Public Utilities Regulatory Commission (PURC), seeking a significant increase of 59 per cent in its Bulk Generation Charge (BGC).
The VRA is seeking to adjust the tariff from 45.0892 Ghana pesewas per kilowatt-hour to 71.8862 pesewas per kilowatt-hour.
The Authority believes this increase is essential to adequately cover the costs associated with power generation provided to distribution companies (DISCOs).
According to VRA, without this increase, maintaining dependable electricity generation and fulfilling operational and financial commitments will become increasingly challenging.
The proposal also includes tariff requests from other distribution utilities. The Electricity Company of Ghana (ECG) has suggested a charge of 55.7671 pesewas per kilowatt-hour, while the Northern Electricity Distribution Company (NEDCo) is seeking 92.7333 pesewas per kilowatt-hour.
The Enclave Power Company Limited (EPCL) has put forth the highest request at 147.1775 pesewas per kilowatt-hour.
If granted, these proposed increases could significantly raise electricity costs for both households and businesses, igniting discussions around affordability, cost recovery, and the long-term viability of Ghana’s power sector.
This request follows ECG’s own proposal for a substantial increase in distribution charges, with ECG aiming for an average 224 per cent hike in its Distribution Service Charge (DSC1) for the tariff period spanning 2025 to 2029.
Under this plan, the charge would rise from the current GHp19.0875/kWh to an average of GHp61.8028/kWh. ECG argues that such a review is crucial for restoring financial stability and ensuring the sustainability of service delivery.
The utility points to rising inflation, fluctuations in foreign exchange rates, increased interest rates, and the necessity for full cost recovery on investments as primary reasons for the proposed adjustments.
ECG’s projection indicates that its annual revenue needs could average GHS 9.1 billion over the next five years, with operational costs, staff expenses, depreciation, capital recovery, and tax responsibilities expected to rise steadily.