NERC orders DisCos to hike tariff from Jan 1

DISCOs finger NERC in new hike in electricity tariff


Nigerians are going to pay more for electricity supply as the Nigerian Electricity Regulatory Commission (NERC) has directed the 11 electricity distribution companies (DisCos) to increase their tariff from January 1, 2020.

The commission published the new tariffs for the different DisCos and categories of customers on its website. The order dated 31st December, 2019, was issued by its chairman, Prof. James Momoh and Secretary Dafe Akpeneye.

The directive is titled, “NERC in the matter of the December 2019 minor review Multi Year Tariff Order (MYTO) for Abuja Electricity Distribution Company Plc.”

According to NERC, this 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.”

It noted that the order took account of the actual changes in relevant macroeconomic variables and available generation capacity as at October 2019 in updating the MYTO operating -2015 Tariff Order for 2019 in line with the provisions of the amended MYTO Methodology.

It said that projections are made for the variables for Year 2020 and beyond based on the best available information .

The commission, however, said it based adjustments in the tariff on the relevant data it obtained from the Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) such as average monthly inflation rate of 11.3 per cent, exchange rate of N309.97.

It further added that it obtained its data on inflation rate from the US rate of inflation , which projected 1.8 percent for the period of January to October 2019.

Gas, which is one of the MYTO variables, according to the commission, its price has been $2.50/MMBTU and gas transportation $0.08/MMBTU.

For the Abuja Electricity Distribution Company (AEDC) residential customers R3 that were paying N27.20 per unit are to now pay N47.09.

The customers are now to pay N19.89 more per unit. It represents 236.75 per cent increase.

The commercial customers C3 that paid N27.20 per unit in 2015 when the tariff was last adjusted and implement are now to pay N47.09 in 2020.

For the Ikeja Electricity Distribution Company Customers, the R3 category paying N26.50 per unit is to now pay N36.92 per unit.

The customers are now to pay additional N10.02 per unit.

This is an indication of 368.49 per cent increase. The commercial customers C3 that paid N24.63 per unit in 2015 are to now pay N38.14 per unit.

The customers are to pay additional N13.51 per unit representing 282.30 percent .

For the industrial customers of the IKEDC D3 that paid N25.82 per unit are now to pay N35.85 per unit.

The difference is now the additional 10.03 per unit, representing an increase of 357.42 percent.

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

The customers are to pay additional N21.01 per unit, which indicates 229.03 percent.

The tariff however insisted that “All DisCos are obligated to settle their market invoices in full as adjusted and netted off by the applicable tariff shortfall.

“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 the energy”

“All FGN intervention from the financing plan of the PSRP for funding tariff shortfall shall be applied through NBET and the MO to ensure 100 percent settlement of invoices issued by market participants.

“Under this framework, the minimum market remittance by AEDC is determined after deducting the revenue deficient arising from tariff shortfall from the aggregate NBET and MO market invoices. AEDC shall be availed the opportunity to earn its revenue requirement only upon fully meeting the following obligations and subject to efficient operations.”

According to the order, the Federal Government’s updated Power Sector Recovery Program envisaged an immediate increase in end -user tariffs until 1st April 2020 and a transition to full cost reflectivity by end of 2021.

In the interim, said the commission, Federal Government, has committed to fund the revenue gap arising from the difference between cost reflective tariffs determined by the commission and the actual end-user tariffs payable by customers.

The NERC explained 100 percent settlement of MO invoice based on the tariffs applied by the MO in determining respective invoices prior to this order.

The commission said that effectively, this order places a freeze on the tariffs of TCN and administrative charges until April 2020 at the rates applied in generating MO invoices for the period of January -October 2019.

NERC insisted that full settlement of 42 percent of NBET’s monthly invoices being the minimum remittance threshold prescribed in this order.

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