The Nigerian Electricity Regulatory Commission (NERC) has waded into the electricity market crisis generated by the recent reduction of tariff by the Enugu Electricity Regulatory Commission (EERC).
NERC, in a Public Notice made available late on Thursday on the application of Multiple Tariff Regime in the Nigerian Electricity Supply Industry (NESI), clarified that the EERC lacks the power to fix tariffs for the electricity consumers in the state from the national grid.
This regulatory intervention has doused the tension generated by the reduction of tariff for Band A customers to N160/Kwh by EERC, with the Association of Nigerian Electricity Distributors (ANED) raising concerns over the development.
ANED said the reduction of the tariff without adequate coordination with NERC and or other market participants raises significant concerns for the stability and liquidity of the NESI, adding that since the release of the Tariff Order by EERC for Enugu State residents, the Electricity Distribution Companies (DisCos) in other States have come under intense pressure and scrutiny to also reduce tariffs, while some customers have taken a position that they would no longer pay their electricity bills until tariffs are reduced.
Meanwhile, the industry regulator, NERC clarified that States that have assumed full regulatory oversight over their intrastate markets are now authorised to create and regulate transactions in their State electricity markets within the confines of powers granted to them by the Constitution, the Electricity Act and their enabling law; and this extends to the development of tariff methodologies that shall apply to end-use customers in their respective States.
However, it stated that as States do not have jurisdiction over the national grid and over electric power stations established under federal laws/operating under licences issued by the Commission; they must holistically incorporate the wholesale costs of grid supply to their States without any qualification or deviation in their design of tariffs for end-use customers in order not to distort the dynamics of the market or be prepared to make a policy intervention by way of a subsidy for any deviation in the tariff structure that distorts the wholesale generation, transmission and legacy financing costs in NESI.
“The Commission’s attention has been drawn to the increasing stakeholders’ concerns on the Tariff Order (Order No. EERC/2025/003) issued by the Enugu State Electricity Regulatory Commission (“EERC) to its Licensee Mainpower Electricity Distribution Limited (MEDL) that relies exclusively on electricity supply (generation and transmission) from the national grid.
“NESI stakeholders have expressed concern about the consequences of the reduction of tariffs for Band A customers in MEDL’s network area to NGN160.4 per kWh and the freezing of tariffs of customers in the other bands on the wholesale generation and transmission costs along with the financing costs for legacy obligations in NESI.
“It is pertinent to state that the NGN160.4 per kWh was arrived at largely by reducing the current average Generation Tariff of NGN112.60 per kWh to NGN45.75, with an assumption of subsidy component, a difference of N66.85 per kWh.
“Section 34(1) of the EA places a statutory obligation on the Commission to “create, promote and preserve efficient electricity industry and market structures, and ensure the optimal utilization of resources for the provision of electricity and we are also aware that EERC as a sub-national electricity regulator also has a similar statutory obligation in their enabling law, and neither NERC nor EERC as responsible regulatory institutions would take decisions that expose the national grid and wholesale electricity market to a financial crisis in contravention of express powers granted to them by the Constitution.,” NERC submitted.
However, it said it is currently engaging EERC on their tariff order as it relates to any perceived area of misinterpretation/misunderstanding on wholesale generation and transmission costs on their import of power from the national grid and grants further assurances of its unwavering statutory commitment that the electricity market will be made whole in terms of cost recovery in compliance with the laws of the Federal Republic of Nigeria.
