NERC begins consultation on new electricity tariff

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Ahead of the April target for the likely introduction of new electricity tariffs, the Nigerian Electricity Regulatory Commission (NERC) has started nationwide consultations.

According to a notice by the Chairman of the NERC, Prof. James Momoh, the consultations will hold from February 25 to March 11 in 12 locations nationwide.

He said the NERC has received Extraordinary Tariff Review Applications from the eleven (11) Electricity Distribution Companies (DisCos) and the Transmission Company of Nigeria Plc (TCN).

He said the consultations will hold as follows: Eko Electricity DISCO (February 25); Kaduna (February 25); Abuja (February 26); Ikeja (February 26); and Ibadan, (February 28).

Others are Bauchi (February 28); Asaba (March 2); Calabar (March 2); Yola (March 5); Owerri (March 6); Kano (March 9); and the Transmission Company of Nigeria (March 11).

The notice reads in part: “Pursuant to procedures set out in Section 76 of the Electric Power Sector Reform Act 2004, the Nigerian Electricity Regulatory Commission adopted the Multi-Year Order (MYTO) methodology for electricity pricing in Nigeria, which sets out the basis and pricing principles for effecting minor and major reviews of electricity tariffs in Nigeria.

“The MYTO provides a tariff path for the electricity industry, with bi-annual minor reviews to take into account the impact of changes in a limited number of parameters (specifically inflation, U.S. Dollar exchange rate to naira, natural gas price and available generation capacity) and major reviews every five years, while all other value chain inputs are reviewed with stakeholders.

“Section 9 of the “Regulations on Procedures for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry” allows for Extraordinary Tariff Review in instances where the utilities can demonstrate that industry parameters have changed from those used in the operating tariffs to such an extent that a review is required urgently in order to maintain industry viability.

“The Nigerian Electricity Regulatory Commission has received Extraordinary Tariff Review Applications from the eleven (11) Electricity Distribution Companies (DisCos) and the Transmission Company of Nigeria Plc (TCN) seeking approval for the following:

“The DisCos have each submitted Performance Improvement Plans (PIP) covering the period 2020-2024 in which the utilities made a case for new capital expenditure allowances over and above the provision in the subsisting MYTO 2015. The justifications advanced included the need to embark on a more aggressive loss reduction, improvement of customer service and the deployment of state-of-the-art-technology to improve delivery.

“The Transmission Company of Nigeria Plc has filed a request for a review of its revenue requirement as a result of its reported significant additional investments in infrastructure currently not captured in its Regulatory Asset Base (RAB). The current stakeholder Consultation process is focusing on a review of the rates for the provision of spinning reserves by GenCos.”

A source in NERC however said: “During the consultations, consumers have the opportunity to comment on what the DisCos are doing right or wrong and additional service needed. They are free to either endorse the new tariff or reject it.

“There are 11 companies and each company has its own cost of operation and level of efficiency.

“The aggregate opinion of consumers nationwide will determine whether or not the tariff increase will be effected.

“Although we are following the laws, we cannot rule out political buy in on a sensitive matter like electricity.

“We have met with the National Assembly, the Manufacturers Association of Nigeria (MAN), NECA and many professional bodies.

Asked of the focus of MAN, the source added:

“Most of their members sought for uniform tariff. So, the Real Sector is seeking uniform tariff. To NERC, the consumers, including manufacturers, will decide.”

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