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30th November, 2010
PURC Considering Implementing Automatic Adjustment Formula On Tariffs
The Public Utility Regulatory Commission (PURC) is considering the possibility of implementing the Automatic Adjustment Formula on tariffs to address any adverse movement of external factors that affect tariffs such as price hikes and cost of production materials and crude oil.
The mechanism allows tariffs to be adjusted periodically. What this means is that instead of waiting for a year before increasing tariffs, the adjustment could be done gradually usually quarterly.
At a consultative meeting with players in the utility industry in Accra, the Executive Secretary of PURC, Mr. Stephen Adu said it had become necessary to look at the formula vis-à-vis any increase or decrease in the price of the commodities that the utility institutions use.
For instance, he said since June that the tariff was announced, there had not been any review in the area of price of crude oil, inflation, the dollar rate against the cedi, vis-à-vis the price of transmission equipment such as transformers and transmission (electrical) wires either downwards or upwards.
He said there is the need to review or revise among other things, on short term basis, usually quarterly, to compare tariffs to the price of commodities and other external factors that goes into production.
Mr. Adu said even though the PURC has tentatively pegged the first quarter of next year to try test the module, it is still consulting and holding discussions with other institutions, agencies and bodies to see how best to arrive at the implementation of the formula.
The mechanism allows tariffs to be adjusted periodically. What this means is that instead of waiting for a year before increasing tariffs, the adjustment could be done gradually usually quarterly.
At a consultative meeting with players in the utility industry in Accra, the Executive Secretary of PURC, Mr. Stephen Adu said it had become necessary to look at the formula vis-à-vis any increase or decrease in the price of the commodities that the utility institutions use.
For instance, he said since June that the tariff was announced, there had not been any review in the area of price of crude oil, inflation, the dollar rate against the cedi, vis-à-vis the price of transmission equipment such as transformers and transmission (electrical) wires either downwards or upwards.
He said there is the need to review or revise among other things, on short term basis, usually quarterly, to compare tariffs to the price of commodities and other external factors that goes into production.
Mr. Adu said even though the PURC has tentatively pegged the first quarter of next year to try test the module, it is still consulting and holding discussions with other institutions, agencies and bodies to see how best to arrive at the implementation of the formula.
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