Higher electricity bills coming as NERC plans tariff review

There are indications that electricity tariff may be increased soon as plans the Nigerian Electricity Regulatory Commission has announced its readiness to review the current tariffs customers pay to the 11 distribution companies (Discos).

NERC is also expected to approve a new capital expenditure (capex) for the energy distributors.

Going by the Multi Year Tariff Order (MYTO) 2015, the approved average capital expenditure allowance to DisCos remains $12million or roughly N5 billion per DiCco annually.

The MYTO, a framework that guides the pricing of electricity in the country, is supposed to be adjusted twice a year.

The commission has thus expressed the readiness for the review, according to the latest notice on its website titled “Notice of Minor and Extraordinary Review of Tariffs for Electricity Transmission Distribution Companies”.

NERC stated that the latest move was pursuant to the provisions of the Electric Power Sector Reform Act which set out the methodology and procedures for reviewing electricity tariffs in Nigeria.

The notice: “The MYTO provides for minor reviews every six months, major reviews every five years and extraordinary tariff reviews in instances where industry parameters have changed from those used in the operating tariffs to such an extent that a review is urgently required to maintain the viability of the industry.”

The commission noted that it held a series of public hearings and stakeholders’ consultations in the first quarter of 2020 on the extraordinary tariff review applications of the 11 electricity Discos to consider their respective five-year Performance Improvement Plans.

NERC, however, said that the evaluation of the Discos’ requests for review of the capital expenditure proposed in their improvement plans could not be concluded for the consideration of the commission during the minor reviews undertaken in 2020.

The commission noted that section 21 of the MYTO, 2020 order, provides for consideration of DisCos’ capital expenditure application upon further scrutiny and evaluation of the investment proposals.

It explained that the latest notice was issued to inform the general public and industry stakeholders of the commission’s intention to conclude the extraordinary tariff review process for the 11 Discos.

In addition, NERC stated that it was also to commence the processes for the July 2021 minor review of MYTO – 2020 to consider changes in inflation, foreign exchange, gas prices, available generation capacity, and capital expenditure.

It stressed that this is required to evacuate and distribute the said available generation capacity in accordance with the extant laws and other existing industry rules.

NERC said, “This notice is hereby issued in compliance with the provisions of EPSRA, the business rules of the commission and the regulations on procedures for electricity tariff reviews in the Nigerian Electricity Supply Industry (NESI) to solicit for comments from the general public on the proposed reviews.

“Stakeholders and the general public are invited to send their comments to the commission within 21 days from the date of this publication.”