Explainer: Why Electrical Energy and Water Price Lists Have Surged to 9.86% and 15.92%, Respectively

Life Pulse Daily | December 8, 2025

Introduction

The cost of living in Ghana has faced a significant shift as the Public Utilities Regulatory Commission (PURC) announced new utility tariffs for 2026. This decision follows a year of cumulative pricing adjustments that have reshaped the economic landscape for households and businesses alike. Specifically, consumers are now facing an electricity tariff increase of 9.86% and a water tariff increase of 15.92%.

These figures are not arbitrary; they are the result of a complex regulatory process known as the Multi-Year Tariff Order (MYTO). This explainer breaks down the mechanics behind these price surges, the financial distress of utility providers, the historical context of these adjustments, and the broader implications for the Ghanaian economy. By understanding the “why” behind the numbers, consumers can better navigate the changing utility landscape.

Key Points

Electricity Surge: The PURC has approved a 9.86% upward adjustment for electricity tariffs under the new Multi-Year Tariff Order (MYTO).
Water Cost Spike: Water tariffs have seen a more significant rise of 15.92%, reflecting critical operational challenges faced by water providers.
Regulatory Mechanism: These tariffs are subject to quarterly reviews to ensure they align with prevailing economic conditions, including inflation and currency exchange rates.
Utility Financial Health: The increases are a response to “serious financial stress” reported by state utilities, essential to prevent operational collapse.
Privatization Efforts: Concurrently, the government is exploring a roadmap to privatize aspects of electricity distribution to improve efficiency.

Background

The Multi-Year Tariff Order (MYTO) Framework

To understand the current 9.86% and 15.92% increases, one must first understand the Multi-Year Tariff Order (MYTO). This is the regulatory framework used by the PURC to set electricity and water tariffs in Ghana. The MYTO is designed to provide a five-year framework for tariff setting, allowing utilities to recover reasonable costs while ensuring fair pricing for consumers.

However, the MYTO is not static. It incorporates quarterly reviews. This means that while a five-year plan exists, the actual prices consumers pay can fluctuate every three months based on the “macroeconomic setting.” If inflation rises or the currency depreciates, tariffs can be adjusted upwards; conversely, if the economy improves, there is potential for downward adjustments.

2025: A Year of Cumulative Adjustments

The 2026 announcement did not happen in a vacuum. It follows a 2025 characterized by “secure and cumulative” pricing changes. Throughout 2025, the utility landscape underwent several shifts:

Water Tariffs: Moved only once, in the second quarter.
Electricity Tariffs: Recorded three separate increases across the year.

These adjustments were necessary to align costs with the underlying price of generation, distribution, and the persistent issue of currency depreciation against the US dollar.

Analysis

Why the Hike? The Financial Distress of State Utilities

The primary driver behind the 2026 tariff hike is the dire financial state of Ghana’s utility companies. Before the PURC’s final decision, state utilities submitted extensive proposals arguing that they were facing severe operational deficits.

The requests were astronomical and highlighted the gap between the cost of service and current revenue:

Electricity Distribution:
- ECG (Electricity Company of Ghana) requested a 225% increase.
- NEDCO requested a 174% increase.
- GRIDCo (Transmission) requested a 75% increase.
- VRA (Volta River Authority) requested a 59% increase.
Water Distribution:
- Ghana Water Company Limited (GWCL) pushed for a staggering 280% increase.

GWCL issued a stark warning: without a significant adjustment, the utility risked a national shutdown. This was not mere hyperbole. The utility has already been forced to suspend operations at treatment plants in areas where illegal mining (galamsey) has rendered raw water so polluted that treatment becomes economically unviable.

Similarly, electricity utilities argued that increases were vital to “keep the lights on.” The 9.86% and 15.92% figures are a compromise—PURC weighs utility demands against the broader economic burden on consumers.

Historical Context: A Cycle of Increases and Reversals

The current scenario mirrors past cycles where economic shocks forced tariff adjustments.

The 2018 Review: This period saw a reduction in tariffs (residential electricity down 17.5%, non-residential down 30%) due to favorable macroeconomic conditions.
The 2020 Reversal: The onset of the COVID-19 pandemic, combined with rising inflation and mounting commercial arrears, forced the regulator to reverse course. Utilities submitted massive proposals (GWCL demanded 300%, ECG 148%).
The 2022 MYTO: Ultimately, PURC authorized mid-20% increases in 2022 to stabilize the sector.

The 2026 adjustments follow this logic: utilities need revenue to survive, but the regulator must calibrate increases to what the economy can support.

The Macroeconomic Paradox: Inflation vs. Currency

The 2026 tariff decision is complicated by mixed economic signals. On one hand, the macroeconomic environment has improved relative to recent years:

Inflation Ease: Inflation dropped sharply from 23.5% in January to 6.3% in November (of the preceding year).
Currency Appreciation: The Ghana Cedi appreciated by 30.4% against the US dollar over the same period.

Usually, a stronger currency and lower inflation would suggest lower costs for utilities (since fuel and equipment are often dollar-denominated). However, the PURC still opted for increases. This suggests that the operational inefficiencies and legacy debts of the utilities outweigh the gains from macroeconomic stability. The introduction of new mini-grid tariffs for island communities also contributed to the overall restructuring of costs.

Practical Advice

How Consumers Can Manage Higher Utility Bills

With electricity up by 9.86% and water by 15.92%, households need to adopt proactive management strategies.

Audit Your Usage: Review your monthly utility bills to identify spikes in consumption. Look for “estimated bills” versus “actual readings” and ensure meters are functioning correctly.
Energy Efficiency Measures:
- Switch to LED lighting, which consumes significantly less power.
- Unplug electronics when not in use to stop “phantom” energy loads.
- Invest in energy-efficient appliances (look for energy star ratings).
Water Conservation:
- Fix leaky faucets and running toilets immediately; these waste gallons of water daily.
- Install low-flow showerheads and faucet aerators.
- Harvest rainwater for non-potable uses like gardening or flushing toilets.
Budget Adjustment: Treat utility bills as a fixed expense that is likely to rise. Adjust your monthly household budget to accommodate the 10-16% increase to avoid financial shocks at the end of the month.

FAQ

Frequently Asked Questions About the 2026 Tariff Hike

Q: Why did water prices increase more than electricity (15.92% vs 9.86%)?
A: The water tariff hike is largely driven by the critical financial distress of the Ghana Water Company Limited (GWCL). They faced higher operational costs due to pollution from illegal mining, which makes water treatment much more expensive, and they requested a much higher percentage increase (280%) to avoid a shutdown.

Q: Will these tariffs change again during 2026?
A: Yes. Under the MYTO framework, tariffs are subject to quarterly reviews. If the inflation rate or currency exchange rate changes significantly, the PURC may adjust these tariffs again in Q2, Q3, or Q4 of 2026.

Q: Is the government selling ECG (Electricity Company of Ghana)?
A: No. Energy Minister John Jinapor clarified that the government is not selling ECG. However, there is a roadmap to privatize operations through a concession model. This means private partners will manage distribution in designated zones to improve efficiency, but the state retains ownership.

Q: What is the role of the IMF in these price hikes?
A: The International Monetary Fund (IMF) has supported renewed private-sector engagement in the utility sector. Their influence encourages reforms aimed at reducing losses (technical and commercial), injecting discipline, and modernizing the distribution network, which often necessitates tariff adjustments to make the sector attractive to investors.

Conclusion

The 9.86% increase in electricity tariffs and 15.92% increase in water tariffs represent a necessary, yet painful, adjustment in Ghana’s utility sector. These hikes are a direct response to the “financial stress” of state utilities, the high cost of raw water treatment due to pollution, and the need to align prices with the true cost of service.

While the macroeconomic environment has improved with lower inflation and a stronger Cedi, the legacy inefficiencies and operational demands of the utilities require this revenue injection to keep services running. As the government moves toward operational privatization to boost efficiency, consumers must remain vigilant with their consumption habits. The 2026 MYTO order is a balancing act—keeping the lights on and the water flowing without breaking the bank for the average Ghanaian family.

Sources

Public Utilities Regulatory Commission (PURC). (2025). Multi-Year Tariff Order (MYTO) 2026 Announcement.
Life Pulse Daily. (2025). “Explainer: Why electrical energy and water price lists have surged.”
Ghana Statistical Service. (2025). Consumer Price Index (CPI) Data – Inflation Rate.
Bank of Ghana. (2025). Foreign Exchange Market Reports.
Ministry of Energy. (2025). Statement on the Privatization Roadmap for ECG.

Explainer: Why electrical energy and water price lists have surged to 9.86% and 15.92%, respectively – Life Pulse Daily