The Electricity Company of Ghana (ECG) has proposed a significant increase in electricity distribution charges, seeking an average rise of 224 percent in the Distribution Service Charge (DSC1) for the tariff period from 2025 to 2029. ECG states that this adjustment—from the current rate of GHp19.0875 per kWh to an average of GHp61.8028 per kWh—is essential for restoring the company’s financial stability and ensuring its long-term operations.
The proposal highlights several key factors driving this adjustment, including rising inflation, fluctuations in foreign exchange rates, increasing interest rates, and the necessity for full recovery of investment costs. ECG’s projections indicate that its annual revenue requirements will steadily increase, averaging GHS 9.1 billion over the five-year period.
The company expects its operational costs, human resource expenses, depreciation, capital recovery payments, and tax obligations to rise, making a substantial tariff review necessary.In addition to the proposed increase, ECG is suggesting a comprehensive set of reforms to the tariff structure. These reforms aim to address the underlying financial challenges facing the company.
Collapse of tariff bands to two categories for residential customers and one for non-residential users, aimed at simplifying billing.
Elimination of cross-subsidisation to ensure equitable allocation of costs and non-discriminatory tariffs.
Net Metering Tariff Structure for customers with grid-connected renewable energy, in line with the government’s renewable energy policy.
Adoption of the Bank of Ghana exchange rate for tariff determination to cushion against forex volatility
Service charge allocation exclusively to ECG for meter maintenance and replacement.
Introduction of a public lighting tariff to resolve funding shortfalls for street lighting.
Full recovery of investment costs for completed and ongoing projects.
Inclusion of liquid fuel costs during plant shutdowns in the Weighted Average Cost of Fuel (WACOF).
Factoring in the full reserve margin cost of 18 percent into tariffs.
Monthly automatic tariff adjustments instead of the current quarterly system.
On energy procurement, ECG projects to source 22,784 GWh from the Volta River Authority and Independent Power Producers in 2025, transmitting 21,478 GWh after accounting for system losses. Losses are expected to decline gradually by one percent per year from the 27.68 percent recorded in 2024.
The utility estimates that the bulk generation cost will increase from 253.78 GHp/kWh in 2025 to 302.73 GHp/kWh by 2029. When including the reserve margin, the cost is projected to rise to between 313.02 GHp/kWh and 359.09 GHp/kWh during the same period. If approved by the Public Utilities Regulatory Commission (PURC), this new tariff structure would represent one of the largest adjustments in Ghana’s electricity pricing history. The Electricity Company of Ghana (ECG) asserts that this change is essential for ensuring power reliability and fostering future investments.
Source: Jonathan Adjei
