FG Announces Timeline for New Electricity Tariff Hike Review
- The federal government, through NERC, has established a structured electricity tariff review every five years
- NERC said that power distribution companies must submit tariff review applications 120 days after receiving a one-year notice
- Currently, Nigerians on Band A pay N10,000 to buy 44kw which only lasts for a few days depending on usage
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Nigerian Electricity Regulatory Commission has released guidelines for electricity tariff reviews every 5 years.
Sanusi Garba, the NERC chairman, noted that the review framework was backed by the provisions of the Electricity Act 2023.
Source: Getty Images
Garba stated that the commission is responsible for reviewing and approving a fair tariff that enables licensees to recover prudent costs and earn a reasonable return on their capital investment in electricity service provision.
The NERC chairman also explained that in Section 116(1) of the Electricity Act, tariff regulation applies to activities in generation, transmission, distribution, trading, supply, system operation, and electricity distribution franchising.
He added that Section 116(2) mandates the commission to develop a tariff methodology that enables efficiently operated licensees to recover their full costs along with a reasonable return on shareholder investments, Punch reports.
His words:
"Under Section 116 of the Act, the commission has established the Multi-Year Tariff Order (MYTO) Methodology as an incentive-based framework for setting and projecting electricity tariffs in Nigeria.
How electricity tariff reviews every 5 years work
NERC’s MYTO methodology allows for a comprehensive review of all tariff assumptions every five years to ensure industry viability and efficiency.
However, the approval for an electricity tariff increase is not straightforward.
To review, NERC will issue a notice to all licensees one year before the expiration of the current tariff order.
After this, the licensees must submit applications for tariff reviews within 120 days of the notice. These applications must include: Audited financial statements, budgets, investment plans aligned with prevailing performanceiImprovement plans, and evidence of extensive customer consultation.
Then NERC will conduct an initial review of the applications and develop a consultation paper within 90 days.
This paper will outline the basis for the tariff review applications, covering: capital investments, service improvements, new connections, loss reductions and potential impacts on customer rates
The consultation paper will be published on NERC's website, and public comments will be demanded for 21 days.
After reviewing stakeholder feedback, NERC will schedule and conclude a Rate Case Hearing within 90 days from the publication of the consultation paper.
The hearing outcomes and public comments will inform the development of a draft tariff order.
NERC said it plans to consider and approve a Major Tariff Review Order within 30 days from the rate case hearing.
Electricity company phases out support for some metres
Legit.ng earlier reported that Ikeja Electric has announced that it will no longer support the Unister card metre and other obsolete card metres under the Federal Government Metre Acquisition Fund (MAF) initiative.
The company disclosed that it will no longer support the Unistar card metre and other outdated metres in use.
Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.
PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!
Source: Legit.ng
