NERC to Implement Cost-reflective Electricity Tariff April 1

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Peter Uzoho

Barring any unforeseen circumstance, the Nigerian Electricity Regulatory Commission (NERC) will effective April 1, 2020, commence the implementation of a cost-reflective in the electricity sector.

A top official of the Commission, who pleaded to remain anonymous, disclosed this in a telephone chat with THISDAY last night, while shedding more light on the recent directive by NERC that the 11 electricity distribution companies (DisCos) should increase their tariff from January 1.

“The cost-reflective tariff will take place from April this year. People would then be paying the real cost of electricity,” the source revealed.

But the source explained that the latest directive to the Discos was because, “the NERC wants to address certain issues in the industry. The Commission wants to ensure that prices being charged are fair to consumers. This also allows the Discos to improve efficiency and be able to recover the cost of their activities.

“Now, the key objective here was the revenue shortfall that we are trying to bridge. So, what was done here was to review the basic assumptions in the tariff methodology and the inflation and exchange rate was taken into consideration in arriving at this new tariff.

However, the new directive meant that Nigerians would now pay more for electricity.
NERC Chairman, James Momoh and Secretary, Dafe Akpeneye, secretary, gave the directive in a memo sent to the DisCos, according to TheCable, an online news platform.

The commission had published the new tariffs for the different DisCos and categories of customers on its website via an order dated December 31.

According the order, the new tariff was reached based on data obtained from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS) and the US rate of inflation.

The commission said the order supersedes, “other orders issued on the subject matter, and shall take effect from 1st January 2020 and shall have effect on the issuance of a new Minor Review Order or an Extraordinary Tariff Review Order by the NERC.”

According to the new tariff, Abuja Electricity Distribution Company (AEDC) residential customers R3 that were paying N27.20 per unit will now pay N47.09.

For the Ikeja Electricity Distribution Company (IKEDC) customers, the R3 category paying N26.50 per unit will now pay N36.92 per unit.

An increase was also recorded in the commercial customers C3 category that paid N24.63 per unit in 2015. They are now expected to pay N38.14 per unit.

The industrial customers of the IKEDC D3 category who paid N25.82 per unit, the charges have been increased to N35.85 per unit.

Enugu Electricity Distribution Company residential (R3) customers who were paying N27.11 per unit in 2015 are to now pay N48.12 per unit.

The commission also directed the DisCos to complete settlement of market invoices.
“All DisCos are obligated to settle their market invoices in full as adjusted and netted off by the applicable tariff shortfall,” it read.

“In the determination for compliance to the minimum remittance threshold in this Order, the commission shall consider verified receivables from MDAs for the settlement period and DisCos’ historical collection efficiency for MDAs.

“The commission shall hold the TCN responsible for deviation from the economic dispatch Order that adversely impact on the base weighed average cost of the wholesale of energy.”
NERC last approved an upward review of tariff in July.