The Public Utilities Regulatory Commission (PURC) ordered the Ghana Water Company Limited (GWCL) to pay a total of GH¢14,640,084.48 to all its customers for breaching Section 11 of the PURC Act 1997, (Act 538).
A statement signed by the Executive Secretary of the PURC, Mrs Mami Dufie Ofori dated September 13, 2018, said the penalties imposed on the GWCL is as a result of the company’s failure to comply with the Commission’s July 2018 new water tariffs which maintained costs related to the Teshie Desalination Plant operated by Befesa Desalination Developments Ghana Limited.
According to the PURC, following the GWCL’s agreement with Befesa to build, own, operate and transfer water purchase agreement, the Commission has since December 2015 included the contracted cost of the plant in its major tariff reviews.
“Between January and July 2018, the Commission undertook a number of measures aimed at giving GWCL a hearing and clarifying the tariff implications associated with GWCL’s operational decisions in respect of the desalination plant. The Commission subsequently issued an enforcement notification which the company failed to comply with,” the statement said.
It explained further that, the July 2018 new water tariffs announced by the Commission maintained costs related to the desalination plant based on GWCL’s decision to operate the desalination plant.
However, monitoring exercises undertaken by the Commission have established that the GWCL has failed or refused to allow the desalination plant to operate, contrary to the Commission’s tariff decision.
The PURC has therefore, as part of sanctions on the GWCL, reduced the water tariffs by 8.64 percent effective September 16, 2018.
This, according to the Commission, represents the component of costs related to the desalination plant approved as part of the July 2018 water tariff decision.
GWCL has also been ordered to refund GH¢14,097,146 to all its customers.
“The amount represents five months’ tariff income unfairly over-recovered by GWCL between March 15 and September 15, 2018. This refund results in a further 1.41% tariff reduction which shall be applied from 16th September 2018 to December 31, 2018,” the statement said.
The company has further been asked to pay GH¢542,938.48 as compensation to all its customers.
“This compensation represents 8.627% of the annual capacity charge of the desalination plant, pro-rated for one month. In tariff revenue terms the compensation amounts to 0.03 % and is imposed on GWCL as a result of the company’s non-compliance with regulatory directives.”
It concluded that the tariff reduction shall remain in effect until the desalination plant is put back into operation or until otherwise decided by the Commission.
“The refund and compensation to customers shall be reflected in customer bills from September to December 2018 billing cycle,” the statement added.
H/T Graphic Online