The Forum of Commissioners for Power and Energy in Nigeria (FOCPEN) has stated that the recent decision by the Enugu State Electricity Regulatory Commission (EERC) to adjust electricity tariffs in the state was in alignment with the provisions of the Constitution of the Federal Republic of Nigeria, the Electricity Act 2023, and Enugu State electricity laws and regulations.
FOCPEN made the clarification in a statement jointly signed by its Chairman, Prince Eka Williams, and Secretary, Barr. Omale Omale, reassuring investors and stakeholders about the direction of electricity sector reforms across Nigerian States.
The Forum said that the legal frameworks empower States to regulate their intra-state electricity markets, including determine and implement electricity tariffs within their jurisdiction, which are fair to electricity consumers and sufficient to allow licensees recover their operating expenses and investments.
“FOCPEN wishes to also clarify that the EERC’s tariff order followed a comprehensive and meticulous review process that involved a thorough examination of the capital expenditure (Capex) and operational expenditure (OpEx) assumptions of MainPower Electricity Distribution Company, the State electricity distribution company.
“This rigorous assessment was conducted using data and information provided by the distribution company itself. EERC also carried out a rigorous assessment of MainPower’s existing customer tariff classification and regulatory asset base.
“One outcome of its rigorous assessment revealed that EERC had lifeline customers paying N4.00/kwh on Band A Feeders, including a former two-time Military Administrator and former Chief of Naval Staff.
“The EERC, acting within the ambit of its regulatory provisions, has set tariffs appropriately based on these findings, aiming for a cost reflective and fair market for consumers and operators alike,” the Forum stated in the statement.
It however, emphasized that while Enugu State has based on its specific market conditions and regulatory findings, adjusted its Band A tariffs downwards, it does not dictate a uniform approach for other States.
“For instance, several SERCs (e.g Ekiti State, Ondo State, etc), have issued tariff orders maintaining the present MYTO tariffs.
“Without any equivocation, each State Electricity Regulator is uniquely positioned within to determine and implement appropriate electricity tariffs that are fair to customer and at same time, catalyze investments within their electricity markets, depending on their perculiar electricity market dynamics, licensee cost structures, consumer needs and regulatory assessments,” FOCPEN said.
The Forum assured investors in the Nigerian Electricity Supply Industry (NESI) that States are not seeking to arbitrarily downgrade tariffs, nor depend on unsustainable electricity subsidies by the Federal Government.
“On the contrary, States are resolute in their call for the removal of untargeted and opaque federal subsidies, advocating instead for the establishment of truly cost-reflective subnational and wholesale electricity markets.
“States, including Enugu State, are collectively committed towards fostering financially viable and sustainable electricity sectors where electricity tariffs accurately reflect the cost-of-service delivery, thereby encouraging investment and efficiency,” it said.
FOCPEN also clarified that State electricity regulators, including EERC, regulate the intra-state distribution segment not the wholesale electricity market. Therefore, the tariffs for wholesale generation and transmission services, which fall under the purview of the Nigerian Electricity Regulatory Commission (NERC), remain secure and unaffected by Enugu State’s regulatory actions.
It noted that the fear among GenCos that Enugu State’s tariff review would negatively impact their revenue streams is unfounded, as Enugu’s regulatory framework does not extend to the wholesale market where GenCos operate.
“The GenCo tariff, as approved by NERC, was duly factored into the EERC’s calculations,” FOCPEN said.
