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PURC announces hold on second quarter utility tariffs increase

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The Public Utility Regulatory Commission (PURC) on Friday announced a hold on the second quarter tariff increases despite upwards changes in some of the key variables that impacted on the operations of the utility service providers.

Announcing the decision at a press conference in Accra, Mr Samuel Sarpong, a Commissioner, said although the Commission recognised increases in some of the key variables, which could trigger an upward review of tariffs, it was withholding any adjustment because of the poor quality of service.

He cited the Commission’s own monitoring and wholesale consumer dissatisfaction about the increasing poor quality of service provided by the utility companies.

Mr Sarpong said the Commission would continue to dialogue with all stakeholders, including the utility companies to establish the causes for recent serious lapses in the quality of service from the utility companies.

In addition, the Commission would investigate the extent to which any possible efficiency savings by the utility companies could mitigate the need for increases in tariffs particularly in the second quarter of 2011.

Mr Sarpong said findings from the above measures would be factored into the Commission’s third quarter 2011 Automatic Adjustment Formula (AAF) tariff review, adding that the Commission remained committed to balancing the needs of all stakeholders in the utility sector.

The Commission introduced the AAF in February this year, to address any adverse movement of external factors that affected tariffs.

The formula, among issues take into account mechanisms such as the foreign exchange rate, crude oil prices on the international market and the cost of generating and producing electricity and water for periodic review of prices.

The AAF aims to reduce the financial burden on consumers associated with one-time tariff adjustments whilst ensuring the financial viability of the utilities.

It will also enable the companies to plan as cost associated with utilities become more predictable.

The PURC for the first quarter from March 1 to May 31, this year, reviewed the electricity and water rates downwards, citing the availability of natural gas from Nigeria through the West African Gas Pipeline and a high hydro component in the generation mix.

Source: GNA

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