NERC begins process to review electricity tariff next year

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Nigeria’s electricity sector regulator, the Nigerian Electricity Regulatory Commission (NERC), has begun the process of implementing a review of the electricity tariff by asking electricity Distribution Companies (DisCos) to submit plans on how to improve their service.


“The process will involve a review of the application of the capital expenditure allowances in the MYTO model for compliance with Performance Improvement Plans (PIPs) to be prepared by the Distribution Companies (DisCos) and approved by the Commission,” NERC said in guidelines it released for performance improvement plans it published May 10.


Under the current rules, the capital expenditure allowed for DisCos was N305 billion within five years, but this has proven unrealistic as the cost of metering alone for customers in Nigeria would cost N299 billion, according to Sunday Oduntan, executive secretary, Association of Nigerian Electricity Distribution Companies (ANED), at a customer engagement forum in Lagos last week.


So, the DisCos are unable to invest more than the N305bn in capital expenditure otherwise recovery of costs under MYTO will be impossible.


The MYTO is a methodology for determining electricity tariff in the Nigerian Electricity Supply Industry (NESI) and sets out tariffs for the generation, transmission and distribution of electricity in Nigeria. It employs a unified way to determine total industry revenue requirement that is tied to measurable performance improvements and standards.


According to the guidelines for the Performance Improvement Plans (PIPs) set by NERC for DisCos, it will cover the 2020-2024 tariff period but it will be subject to the contractual provisions of the Performance Agreements executed between the core investors and the Bureau of Public Enterprises in respect of the allowances for capital and operating expenditure in the remaining term of the agreement.


NERC will use the PIPs to define …

Electricity tariff in Nigeria too low to sustain steady power supply – Society of Engineers

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Against the backdrop of poor power supply in Nigeria, the trend will continue to be elusive until the tariff paid by consumers is reviewed upwards to sustain high revenue inflow to power production and distribution companies.

Engineer Adekunle Mokuolu, President of Nigerian Society of Engineers, NSE, disclosed this in Calabar while speaking at the 3rd memorial lecture in honour of Engineer John Egbe, a former national vice chairman of the Society.

He said power distribution companies have to undertake estimated billing of customers in order to raise revenue to keep them afloat.

‘standards in this country are bastardised so the distribution companies are using that to break  even because the overhead cost for the production and distribution of electricity is very high  while the tariff is very low so the distribution companies which deal directly with the consumers have to rely on estimated billing to increase their revenue”.

Engineer Mokuolu said electricity production and distribution companies are business enterprises and not humanitarian organisations so there is need for power sector policy review to update existing laws and policies in the sector to engender efficient power supply.

“The Challenge with power sector in Nigeria is not principally with the engineers but the problem is on how we manage the various components that make up the sector like the finance, policy, management and infrastructure and what we intend to do is begin a dialogue with stakeholders to review and update the power sector policies”.

The NSE President stated that what Nigerians want is clean electricity supply and are willing to pay for it but the outdated power sector policies cannot deliver the quantum of electricity Nigerian consumers need at the moment.

Delivering the lecture ‘Provision of Sustainable Power Supply in Nigeria- the way forward’ , Engineer … Read More...