NERC to begin another electricity tariff review

The Nigerian Electricity Regulatory Commission (NERC) has notified the public of the second electricity tariff review this year as it called for comments within 21 days.

In a notice it published on Wednesday, the power sector regulator said the tariff review is for the Distribution Companies (DisCos), the Generation Companies (GenCos) and the Transmission Company of Nigeria (TCN).

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Daily Trust also reports that the review notice issued by the Chairman, Prof. James Momoh, would not be superintended by him as he was due to leave office yesterday, November 26, having clocked 70 years, as specified by the Electric Power Sector Reform Act 2005.

The latest tariff order referred to as the Multi Year Tariff Order (MYTO) 2020 was re-implemented on November 1, 2020 with tariffs rising by over 50 per cent for most consumers.

While that tariff will elapse by December, NERC could implement this reviewed tariff by January 2021.

The Commission considers parameters during the review such as inflation, US Dollar exchange rate to Naira, natural gas price and available generation capacity. Higher inflation and forex especially, could trigger a rise in the tariff, our analysis shows.

NERC said although the current MYTO 2020 addresses some investment recovery issues of the DisCos, there is still a gap.

“The issues presented by the DisCos in their request were, however, not fully considered by the Commission considering that no additional Capital Expenditure (CAPEX) was approved for them to meet the periodic service level commitments required to deliver energy to customers on the different service bands.”

It was learnt that the 11 DisCos have submitted their extra-ordinary tariff review proposals to NERC for the agency to add the CAPEX fund to the tariff.

“The Commission therefore intends to continue with the ongoing extra-ordinary tariff review for the DisCos in addition to the mandatory periodic minor review,” NERC confirmed.