Electricity Tariff Hike: NERC Asks DisCos to Justify Requests for Higher Rates
- As DisCos continue to agitate for an increase in electricity tariffs, NERC has asked them to explain what they will do with the money
- After the last upward review of electricity tariffs in 2024, DisCos recently started agitating for another increase
- Meanwhile, the federal government has also hinted that there will be higher electricity tariffs to reflect the actual cost of energy production
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Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
As Nigerian electricity distribution companies (DisCos) continue to clamour for an increase in electricity tariffs, the Nigerian Electricity Regulatory Commission (NERC) has directed them to submit financial plans to justify their requests.
This includes investment plans showing what they want to do with the additional income expected from a tariff increase.
The directive was contained in an order from the NERC Chairman, Sanusi Garba.
Source: UGC
FG hints at 66.67% hike in tariffs
Recall that the Federal Government recently hinted at an upcoming hike in electricity tariffs, and the announcement met with several reactions from netizens.
This is coming just months after the last 300% increase in tariffs targeted at customers under the Band A feeders.
Also earlier this year, the Aba Disco implemented a 140% increase in tariffs after securing NERC approval in December 2024. Several customers were also upgraded to higher bands before they were later informed.
Electricity tariff reviews will happen every 5 years
The order from the NERC Chairman noted that the provisions of the Multi-Year Tariff Order (MYTO) methodology, allow for an upward review of electricity tariffs every 5 years.
This is to ensure that the industry stays viable and sustainable.
Garba noted that the process requires the commission to request for and receive applications for the tariff reviews about a year before the review.
It reads;
“The Notice shall request for submission of applications for the review of tariffs supported with documentation that includes but is not limited to audited financial statements, budgets, investment plans (in line with prevailing guidelines on Performance Improvement Plans), and proof of wide consultation with customers in the licensees’ service area concerning the proposed filing of the application for tariff review and any other information as deemed necessary by the commission.”
Garba stated that NERC has to ensure fair tariffs that enable licensees to recover prudent costs and earn a reasonable return on their capital investment in electricity service provision, without exploiting consumers.
Recall that Nigerians did not respond favourably to the proposed hike in electricity tariffs, especially as the price of other power alternatives has surged.
FG explains 65% tariff hike
In related news, the federal government recently offered clearer explanations on the proposed 65% hike in electricity tariffs.
Special Adviser to the President on Energy, Olu Verheijen explained that the current price regime is not cost-reflective as the government still spends up to N200 billion monthly to subsidise the cost for both rich and poor.
She noted that they will soon implement cost-reflective pricing so that the electricity generating and distribution companies can be sustainable.
She added that there will be plans to protect the poorest and most vulnerable Nigerians from bearing the brunt of the new price regime, and this would be done through tariff vouchers or discounts.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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