Accra: Ghana's latest electricity tariff increase has sparked a familiar question: if the cedi is strengthening and fuel prices at the pump are coming down, why do light bills keep going up? The answer lies in how the power sector actually works, what the new tariff decision is designed to pay for, and who we have decided should not be left behind.
According to Ghana Web, the key issues behind the 9.86% average increase in electricity tariffs effective January 1, 2026, are captured in the Public Utilities Regulatory Commission's (PURC) 2025-2030 Major Tariff Review Decision. This review is not a typical quarterly adjustment but a five-year 'investment' tariff, ensuring predictable revenue for power companies to invest in infrastructure, such as new lines and IT systems, to maintain a reliable electricity supply over the medium term.
Another factor contributing to the increase is Ghana's shift towards a more expensive generation mix. With a reliance on thermal generation at 71%, the cost per kilowatt-hour has risen, despite a stable cedi and low inflation. Contracts with Independent Power Producers (IPPs) include clauses that require payment for available capacity, driving up costs even if not all energy is used.
Moreover, pump prices and the power sector's fuel costs are not directly correlated. The weighted average cost of gas (WACoG), which includes transport and processing costs as well as contractual obligations, remains a critical factor in power generation expenses. PURC's framework accounts for these costs over a five-year period to prevent sector debt.
Legacy debts and financial obligations within the power sector also play a role. Accumulated debts from tariff under-recoveries and delayed payments necessitate a tariff path that ensures utilities meet their financial commitments and maintain infrastructure.
Additionally, Ghana's commitment to providing electricity to remote island communities, like those on the Volta Lake, has added costs that are spread across the general tariff. These areas benefit from solar-battery mini-grids, enabling essential services but at a higher cost per customer.
The increase in tariffs, even amidst positive macroeconomic indicators, reflects a need for long-term investment, a shift in generation mix, the dynamics of gas contracts, legacy financial obligations, and a commitment to equitable electricity access. Transparency and efficiency from utilities and regulators remain essential, but understanding these cost drivers highlights the importance of maintaining a reliable and inclusive power system.