NERC Unveils New Tariff Rules to Regulate Mini-grid Operations in Nigeria
- The federal government has issued rules guiding tariff allowance for mini-grid operations in the country
- According to NERC, a mini-grid operator has the option to modify tariffs through an arrangement with the community
- NERC also stated that those holding permits for interconnected mini-grids are obligated to remit a DUOS charge to the Distribution Companies (Discos)
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
The federal government, through the Nigerian Electricity Regulatory Commission (NERC), has established regulations outlining tariff allowances for mini-grid operations within the country.
The recently introduced directives have additionally defined permissible technical losses for mini-grid operators at 4%, according to the existing rules.
Source: UGC
In its guidelines, the regulatory body further stipulated that mini-grids should possess a generation capacity ranging from 0kW to 1MW per site.
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This development follows NERC's issuing of permits to 10 mini-grid developers with a distribution capacity surpassing 100 kilowatts and a generation capacity of up to one megawatt.
Mini-grid operators can modify tariffs
A mini-grid refers to an independent electricity supply system with its generation capacity, providing electricity to multiple customers and capable of functioning either in isolation or connecting to a distribution licensee's network.
Under the guidelines unveiled by NERC, those managing mini-grids have the authority to establish retail tariffs and additional charges using the Multi-Year Tariff Order (MYTO) calculation tool.
Conversely, a mini-grid operator has the option to modify tariffs through an arrangement with the community, as long as it is represented by customers consuming a minimum of 60% of the electrical output from the mini-grid.
Threshold for non-technical losses in mini-grids should not exceed 3%
The power sector in Nigeria grapples with significant concerns over technical losses occurring within the power distribution network.
This concern has led the industry regulator to establish a specific limit for technical losses in mini-grids, capping it at 4%.
The regulations outlined in the recently enacted Electricity Act (EA), signed by NERC's chairman, Sanusi Garba, also specify that the acceptable threshold for non-technical losses in mini-grids, particularly those involving interconnected solar plants, should not surpass 3%.
Operators obligated to remit DUOS charge to DisCos
Per the directives from NERC, those holding permits for interconnected mini-grids are obligated to remit a Distribution Use of System (DUOS) charge to the Distribution Companies (Discos).
The specific DUOS charge is to be mutually agreed upon between the permit holder of the interconnected mini-grid and the Disco, and it must receive approval from the commission.
In determining retail tariffs and additional charges, a mini-grid permit holder can utilize the Multi-Year Tariff Order (MYTO) calculation tool or reach an agreement between the mini-grid operator and the community.
This community should be represented by customers consuming no less than 60% of the electrical output from the mini-grid.
In cases where a mini-grid is interconnected, NERC has specified that the duly authorized representatives of the connected community, the mini-grid developer, and the Disco will collectively sign a tripartite contract covering the transaction, as outlined in the regulations.
It would be recalled that earlier in the year, Legit.ng reported that NERC debunked widespread reports of an impending electricity tariff hike beginning January 1, 2024.
NERC dissolves Kaduna DisCo's board over N110 billion debt
In related news, Legit.ng reported that NERC dissolved the board of Kaduna DisCo over N110 billion debt.
According to the regulatory agency, dissolution came following the company's inability to meet its obligations, which amounted to N182.16 billion in the last four years.
NERC said in a 9-page order signed by its chairman, Sanusi Garba, and vice chairman, Musiliu Oseni, that the dissolution took effect from January 1, 2024.
The amount includes N51.9 billion market remittance shortfall, N25 billion minimum capital expenditure requirements, and N11.46 billion operations expenses requirement for 2023.
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Source: Legit.ng
