{"id":114152,"date":"2026-02-05T08:24:13","date_gmt":"2026-02-05T08:24:13","guid":{"rendered":"https:\/\/sotnews.agency\/?p=114152"},"modified":"2026-02-05T08:24:13","modified_gmt":"2026-02-05T08:24:13","slug":"why-your-light-bills-are-up-amidst-strong-cedi-and-lower-petrol-prices","status":"publish","type":"post","link":"https:\/\/sotnews.agency\/?p=114152","title":{"rendered":"Why your light bills are up amidst strong cedi and lower petrol prices"},"content":{"rendered":"
\n
\n \t<\/i> Read Time:<\/span>6 Minute, 50 Second <\/div>\n\n <\/div>
\n

Ghana\u2019s 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.<\/p>\n

Below is a plain\u2011language walkthrough of the key issues behind the 9.86% average increase in electricity
tariffs effective January 1, 2026, as captured in the Public Utilities Regulatory Commission\u2019s (PURC)
2025\u20132030 Major Tariff Review Decision.<\/p>\n

    \n
  1. This is a 5\u2011year \u201cinvestment\u201d tariff, not just a quarterly adjustment.<\/strong><\/li>\n<\/ol>\n

    The first thing to understand is that this is not one of the usual quarterly reviews that mostly track
    short\u2011term changes in inflation, exchange rate and fuel prices.<\/p>\n

    It is a major Multi\u2011Year Tariff Review that sets the framework for 2026\u20132030 and, by law, must cover
    both capital expenditure (CAPEX) and operating expenditure (OPEX) for the utilities.<\/p>\n

    PURC explicitly notes that the \u201cregulated asset base\u201d of utilities such as GRIDCo, ECG, NEDCo and
    VRA has been evaluated for the 2026\u20132030 period, and the new tariffs are meant to allow them to meet
    their asset investment requirements over the next five years.<\/p>\n

    In simple terms, this review is about giving the power companies enough predictable revenue to invest in
    new lines, substations, meters, IT systems and maintenance so that the lights will actually stay on over the
    medium term, not just this quarter.<\/p>\n

    Those investments do not disappear just because the cedi has had a good run for a few months; they are
    long\u2011term, lumpy costs that must be planned and recovered over several years. <\/p>\n

    2. More thermal, less hydro \u2013 and that mix is expensive. <\/strong><\/p>\n

    A second, often misunderstood, factor is the changing generation mix.<\/p>\n

    Ghana\u2019s cheapest bulk power historically comes from hydro (Akosombo, Kpong, Bui), while thermal
    plants that burn gas or other fuels are more expensive per kilowatt\u2011hour.<\/p>\n

    Current planning figures show that Ghana is relying far more on thermal generation (71%) than before,
    with thermal expected to provide the bulk of total generation over the control period, while the share of
    hydro declines(28%).<\/p>\n

    Many of the thermal plants are owned by Independent Power Producers (IPPs) under medium\u2011 to
    long\u2011term contracts that include \u201ctake\u2011or\u2011pay\u201d and capacity\u2011charge clauses.<\/p>\n

    That means the system operator must pay these IPPs for available capacity, whether or not every unit of energy is eventually used.<\/p>\n

    In practice, this pushes the system to dispatch more thermal power to avoid paying for unused contracted capacity, and that raises the average cost of electricity even when the cedi is relatively stable, and headline inflation is down.<\/p>\n

    So while macroeconomic indicators are improving, the structural reality is that we are leaning on a more
    expensive generation portfolio, and those contractual obligations have to be honoured.<\/p>\n

    3. Pump prices are not the same as the power sector\u2019s fuel cost<\/strong><\/p>\n

    Many people reasonably link \u201cfuel prices are down\u201d with \u201celectricity should be cheaper,\u201d but the two fuel
    stories are not identical.<\/p>\n

    For transport, we look at the price you pay at the fuel station for petrol or diesel.<\/p>\n

    For power generation, the key variable is the weighted average cost of gas, often called WACoG.<\/p>\n

    WACoG is a composite number that blends:
    \u25cf Gas from different upstream sources (domestic fields, imports from Nigeria through the West
    African Gas Pipeline, LNG, etc.)
    \u25cf The transport and processing costs involved in delivering that gas to the power plants
    \u25cf The contractual obligations (minimum offtake volumes, penalties, currency of payment) attached
    to each gas source<\/p>\n

    Because of this, the gas used in power plants can remain relatively expensive \u2013 or at least not fall as fast
    as pump prices \u2013 depending on the mix of contracts, the volumes actually taken and the foreign\u2011exchange terms.<\/p>\n

    PURC\u2019s framework allows quarterly reviews to reflect changes in WACoG, exchange rate and inflation,
    but in a major 5\u2011year review, the Commission must also take a conservative, forward\u2011looking view of gas
    costs to avoid under\u2011recoveries that would throw the sector into debt again.<\/p>\n

    So a lower price at the pump does not automatically translate into a proportionate drop in the cost of
    generating electricity.<\/p>\n

    4. Clearing legacy debts and keeping utilities financially alive<\/strong><\/p>\n

    Another uncomfortable but necessary reality is the accumulated debt within the power sector.<\/p>\n

    Over years of tariff under\u2011recoveries, delayed payments and political interventions, arrears have built up
    between the government, utilities and IPPs.<\/p>\n

    The new tariff path is also about \u201ctaking the pain early\u201d so that utilities can:
    \u25cf Meet their payment obligations to IPPs and gas suppliers
    \u25cf Service loans taken for network and generation investments
    \u25cf Regain enough financial health to maintain infrastructure and invest in upgrades<\/p>\n

    PURC stresses that tariffs have to maintain the real value of revenues across the control period, otherwise
    inflation will quietly eat away the utilities\u2019 ability to operate, even when the nominal tariff looks
    unchanged.<\/p>\n

    If the sector cannot pay its bills, we risk a return to curtailments, load shedding and stalled investment \u2013
    outcomes that are far more damaging to households and businesses than a single\u2011digit percentage increase in tariffs.<\/p>\n

    5. Mini\u2011grids, island communities and the price of solidarity<\/strong><\/p>\n

    Perhaps the least understood \u2013 but morally important \u2013 driver of the new tariffs is Ghana\u2019s push for
    universal electricity access, particularly for remote island and lake communities.<\/p>\n

    Dozens of communities on the Volta Lake and along remote stretches of river were, until recently,
    completely off\u2011grid.<\/p>\n

    Reaching them with conventional grid extension is technically difficult and extremely expensive, so
    Ghana has deployed solar\u2011battery mini\u2011grids in places like:<\/p>\n

    \u25cf Atigagorme and Wayokope on the Volta Lake
    \u25cf Aflivie, Azizakpe and Alorkpem in the Ada area
    \u25cf Other small island and lakeside communities that are only accessible by boat<\/p>\n

    These mini\u2011grids have transformed life in these communities \u2013 enabling lighting, refrigeration, water
    pumping, small businesses and better social services \u2013 but their cost per customer is much higher than in
    dense urban areas.<\/p>\n

    Here is the critical policy choice:<\/p>\n

    PURC has decided that customers in these island communities should pay the same national uniform
    tariffs (lifeline and residential) as other Ghanaians, rather than a much higher \u201ctrue cost\u201d tariff that would
    price them out of basic electricity use.<\/p>\n

    To make that work, the extra cost of supplying these communities has been added to the revenue
    requirement of the Volta River Authority (VRA) and spread across the general tariff paid by everyone
    else.<\/p>\n

    In other words, part of the increase in your bill is effectively a cross\u2011subsidy \u2013 a small contribution each
    of us makes it so that families living on remote islands can also enjoy reliable power for their homes,
    schools and clinics.<\/p>\n

    You can think of it as a solidarity surcharge built into the national tariff structure: invisible on the bill, but
    very visible in the lives of people who used to live in the dark. <\/p>\n

    6.Why tariffs rise even when the headline economy improves<\/strong><\/p>\n

    Putting all these elements together explains why electricity tariffs can rise even when some macro
    indicators look positive:<\/p>\n

    \u25cf A 5\u2011year tariff review must lock in enough revenue for long\u2011term investment, not just reflect this
    quarter\u2019s good news.
    \u25cf The generation mix has shifted toward more expensive thermal power, with contractual
    obligations that limit how far costs can fall in the short term.<\/p>\n

    \u25cf The fuel cost that matters for power (the weighted average cost of gas) follows its own dynamics
    and contracts, and does not track pump prices one\u2011for\u2011one.
    \u25cf The sector has legacy debts and ongoing obligations that must be honoured to keep the system
    solvent and the lights on.
    \u25cf As a country, we have chosen to extend modern electricity to remote island communities at the
    same tariff everyone else pays, which means the extra cost is quietly shared across all consumers.<\/p>\n

    These are not always comfortable truths, but they are necessary for an honest conversation about
    electricity pricing.<\/p>\n

    Citizens are right to demand transparency and efficiency from utilities, government, and regulators
    must continually push for value for money.<\/p>\n

    At the same time, understanding the real cost drivers helps us see that not every tariff increase is a sign of
    hidden agendas; sometimes, it is the price of maintaining a reliable system, honouring signed contracts
    and making sure no part of the country is permanently left in the dark.<\/p>\n<\/div>\n

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    Ghana\u2019s latest electricity tariff increase has sparked a familiar question:
    \nIf the cedi is strengthening and fuel prices at the pump are coming down, why do light bills keep going
    \nup?
    \nThe 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.<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_2277560469115098_106292521332774":"","twitter_aToxNzczMzI3Njk4OTg4ODUxMjAxOw==_1773327698988851200":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1919,158,16422,477,3380,10,9],"tags":[],"class_list":["post-114152","post","type-post","status-publish","format-standard","hentry","category-cedi","category-energy","category-light-bills","category-opinion","category-petrol","category-politics","category-popular"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts\/114152","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=114152"}],"version-history":[{"count":0,"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts\/114152\/revisions"}],"wp:attachment":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=114152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=114152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=114152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}