ECG seeks 224% increase in distribution charges

The Electricity Company of Ghana (ECG) has formally submitted a proposal to increase electricity distribution charges by an average of 224 percent.

A move, the company says, is necessary to sustain reliable operations and restore financial stability.

In its request, ECG explained that the proposed adjustment in distribution charges from 19.0875 pesewas per kilowatt-hour to an average of 61.8028 pesewas represents a 224 percent increase.

ECG stressed that the sharp rise is crucial to covering operational costs, repaying investments, and safeguarding power supply across the country.

They maintained that without the 224 percent hike in distribution service charges, the company’s finances will continue to weaken, posing risks to both infrastructure investments and service delivery. It cited inflationary pressures, exchange rate volatility, interest rate hikes, and the growing cost of fuel and materials as major drivers of the proposal.

Projections submitted by the company show that annual revenue requirements will average GHS 9.1 billion between 2025 and 2029. This estimate takes into account depreciation, tax obligations, human resource costs, capital recovery payments, and other operational expenses, all of which ECG says are rising steadily.

The proposal also outlines wide-ranging reforms to the tariff system. Among them is a collapse of tariff bands into two categories for residential consumers and one for non-residential users, aimed at simplifying billing. ECG is also recommending the elimination of cross-subsidies, the introduction of a net metering tariff for renewable energy users, and the adoption of the Bank of Ghana’s exchange rate in tariff calculations to reduce forex-related shocks.

Additionally, the company has suggested monthly automatic tariff adjustments, a dedicated public lighting tariff, and the recovery of investment costs for ongoing and completed projects. Costs incurred during power plant shutdowns, including liquid fuel expenses, are also expected to be factored into tariffs.

READ: Inflation could drop to 9% by end of 2025 – Prof. Baah-Boateng

On energy procurement, ECG projects that in 2025 it will purchase 22,784 GWh of electricity from the Volta River Authority and Independent Power Producers, transmitting 21,478 GWh after accounting for system losses. The company expects these losses, which stood at 27.68 percent in 2024, to decline gradually by one percentage point annually.

If the Public Utilities Regulatory Commission (PURC) approves the 224 percent tariff adjustment, it will mark one of the largest revisions in Ghana’s history of electricity pricing. ECG insists the changes are not only unavoidable but vital to securing long-term investment, improving service delivery, and ensuring uninterrupted power supply for homes and businesses.