Electricity Consumers to Pay More as NERC Adjusts Tariff

Consumers in the country will begin to pay more for electricity following an adjustment of tariff by the Nigerian Electricity Regulatory Commission (NERC).

The approval was given in a Multi-Year Tariff Order (MYTO) signed by the new NERC Chairman, Sanusi Garba, and obtained by Channels Television on Tuesday.

In the document dated December 31, 2020, the agency stated that the order was effective from January 1, 2021.

The new rate is payable by electricity customers of the 11 Distribution Companies (DISCOs) spread across the country.

The new increment order was issued barely two months after the implementation of the controversial increase proposed in 2020.

Part of the document reads,

This order supersedes ORDER/NERC/202B/2020 and shall take effect from 1 January 2021 and shall cease to have effect on the issuance of a new Minor Review Order or an Extraordinary Tariff Order by the Nigerian Electricity Regulatory Commission (“NERC” or the “Commission”).

The commission, pursuant to sections 32 and 76 of the Electric Power Sector Reform Act (“EPSRA”), issued the Revised MYTO – 2020 Tariff Order within an effective date of 1 November 2020 to address, amongst other objectives, the transition to cost-reflective tariffs (CRT) and introduction of Service-Based Tariffs (SBT) regime with a view to improving customer service experience as well as ensuring financial sustainability of the Nigerian Electricity Supply Industry (“NESI”).

In line with the Regulations on Procedure for Electricity Tariff Review in the Nigerian Electricity Supply Industry and MYTO Methodology (Amended), this Minor Review of the Revised MYTO – 2020 Order considered the impact of inflation rates (Nigeria and USA), foreign exchange rate (NGN/USD), gas prices, available generation capacity and material variances to the accompanying CAPEX and OPEX required for the evacuation and distribution of available generation capacity.

Accordingly, the Order is issued to reflect the impact of changes in the Minor Review variables as indicated in section 7 of this Order and used relevant projections based on best available information in the determination of cost-reflective tariffs (CRT) and relevant tariff shortfalls for the year 2021.

The Order also determines the minimum remittances payable by IBEDC in meeting its market obligations based on the allowed end-user tariffs.

NERC Denies ’50 Per Cent’ Tariff Increase

Five days after the order was issued, there was an outcry over the adjustment by NERC following reports that consumers would pay about 100 per cent more.

In a swift reaction, the regulatory body denied the reports and accused the media outfits that published same of misinforming the public.

NERC, in a series of tweets, insisted that tariff for customers being served less than an average of 12 hours of supply per day over a period of one month would remain frozen and subsidised, in line with the policy direction of the Federal Government.

It, however, admitted that the rates for service bands A, B, C, D, and E have been “adjusted” by N2 to N4 per kilowatt-hour (KWH).

Noting that the adjustment was in compliance with the provisions of the Electric Power Sector Reform (ESPR) Act and Nigeria’s tariff methodology for biannual minor review, the agency explained that it was aimed at reflecting the partial impact of inflation and movement in forex.

Read the statement issued by NERC below:

PUBLIC NOTICE ON PURPORTED 50% INCREASE IN ELECTRICITY TARIFFS

The attention of the Commission has been drawn to publications in the print and electronic media misinforming electricity consumers that the Commission has approved a 50% increase in electricity tariffs.

The Commission hereby states unequivocally that NO approval has been granted for a 50% tariff increase in the Tariff Order for electricity distribution companies which took effect on January 1, 2021.

On the contrary, the tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remains frozen and subsidised in line with the policy direction of the FG.

In compliance with the provisions of the EPSR Act and the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted by NGN2.00 to NGN4.00 per kWhr to reflect the partial impact of inflation & movement in forex.

In the light of strong public interest on this matter, the media is hereby requested to retract their earlier publications misinforming electricity consumers nationwide about a purported 50% increase in electricity tariffs.

The Commission remains committed to protecting electricity consumers from failure to deliver on committed service levels under the service-based tariff regime.

Any customer that has been impacted by any rate increases beyond the above provision of the tariff Order should report to the Commission at customer.complaints@nerc.gov.ng

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