…As States Insist Electricity Act Provisions Justify Review
States’ Commissioners of Energy in the country on Wednesday hinted of their readiness to meet with electricity distributing companies (DisCos) to renegotiate electricity tariffs that are reflective and not burdensome on consumers in the states.
The commissioners’ latest move was sequel to the recent downward review of electricity tariff for Band A customers from N209/kWh to N160/kWh by the Enugu Electricity Regulatory Commission, and the criticisms that trailed the EERC’s action by both power generation companies (GenCos) and the DisCos
However, the DisCos have ruled out any negotiations with states on power tariffs, stressing that the move by the sub-national governments to make them review tariffs downward could cripple the power sector
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Even then, the EERC has continued to defend its position and that it is ready to succumb to the demands of the GenCos and and DisCos since the decision to regulate the power sector falls within the Electricity Act 2023 provisions.
Commenting on the faceoff between the GenCos and DisCos on the tariff review issue, the Chairman of the Forum of Commissioners of Power and Energy in Nigeria, who is also the Commissioner of Power and Renewable Energy for Cross River State, Prince Eka Williams, said that though some states might have the wherewithal to subsidise the power supply of their residents, the aim of state governments was mainly to ensure adequate power supply in their states.
He maintained that the Electricity Act 2023 had empowered the states to regulate the sector in their domains, and rued attempts by the GenCos and DisCos to frustrate the legal option.
The commissioner said: “Without any equivocation, each State Electricity Regulator is uniquely positioned to determine and implement appropriate electricity tariffs that are fair to customers and at the same time, catalyse investments within their electricity markets, depending on their peculiar electricity market dynamics, licensee cost structures, consumer needs, and regulatory assessments.”
On the readiness or otherwise of the state governments to bear the burden of electricity subsidies sequel to Minister of Power declaration that the Federal Government was no longer ready to continue the subsidies, Williams said he would not like to unilaterally agree or disagree with the minister’s comments as the power sector is currently going through a lot of experimentation and there is no one-size-fits-all approach to dealing with the emerging developments in the sector.
He explained: “What’s important is that all stakeholders sit at the table to discuss these issues, taking into account the unique circumstances of each state. States operate differently. So, any governor who feels inclined can say, ‘I’m ready to shoulder this responsibility.’
“I believe what the minister is suggesting is that states can and should have more input in shaping the electricity conversation. But it’s still an ongoing dialogue. It’s not something you can pin down as a definitive statement. It requires extensive consultation and engagement”, the commissioner added.
In a statement issued on Wednesday, the Forum of State Commissioners of Power and Energy described the claims by the GenCos and DisCos as unfounded, allaying fears that the decision of Enugu to reduce the tariff of Band A would negatively impact its revenue streams.
The forum maintained that the downward review of electricity tariffs by the EERC aligned with the provisions of the Electricity Act 2023 and was based on comprehensive review process of thorough examination of the capital and operational expenditures and assumptions of MainPower Electricity Distribution Company operating in the state.
The forum clarified: “The Enugu Electricity Regulatory Commission carried out a rigorous assessment of MainPower’s existing customer tariffs classification and regulatory assets base of N4.00 kWh on Band A feeders. The EERC, acting within the ambit of its regulatory provisions, has set tariffs approximately based on its findings, aiming for a cost-reflective and fair market for consumers and operators alike.
“For instance, several states, Ekiti, Ondo states, and others have issued tariff orders maintaining the present MYTO tariffs”, it added.
The forum assured investors and the Nigerian Electricity Supply Industry (NESI) stakeholders that the states did not arbitrarily reduce tariffs or depend on unsustainable electricity subsidies by the Federal Government, adding that on the contrary, states are resolute in their call for the removal of untargeted and opaque federal subsidies but canvassing instead for the establishment of truly cost-reflective subnational and wholesale electricity markets.
It would be recalled that the Nigerian Electricity Regulatory Commission (NERC) recently disclosed that seven states now control their electricity markets in accordance with the Electricity Act 2023. The states are Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi. Other states, including Lagos, Ogun, Niger, and Plateau, are expected to complete their transitions between now and September.
Already, some of the states, including Lagos, Ondo and Plateau have indicated their plans to review downward power tariffs in their domains in line with the Electricity Act that empowers them to do so.
