Why Govt approved electricity tariff hike – NERC

Nigeria’s power sector regulator, Nigerian Electricity Regulatory Commission (NERC) yesterday gave insights into why the government approved increase in electricity tariff despite complaints from customers.

Regulatory documents obtained yesterday indicated that government had approved tariff raise for electricity power distribution companies (Discos).

According to the documents, NERC based the increase on the performance improvement plans of the DisCos and on indices such as gas price, inflation, exchange rate, United States of America inflation rate and available generation capacity.

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The commission noted that the indices with potential impact on electricity rates were considered.

It added that these indices shall be reviewed in every six months to update the tariffs with changes in the indices as applicable in line with the MYTO.

This was contained in the commission’s Order  No: NERC/304/2021, which it’s chairman, Sanusi Garba and Vice Chairman Musiliu Oseni signed on 29th December, 2021.

The authorization letter from NERC for the tariff hike which popped up in the electricity regulator’s website yesterday, was issued to the Port Harcourt Electricity Distribution Company (PHEDC); Jos Electricity Distribution Company (JEDC), Kano Electricity Distribution Company (KEDC), Kaduna Electricity Distribution Company (KEDC),  Jos Electricity Distribution Company (JEDC), Ikeja Electricity Distribution Company (IKEDC) and Ibadan Electricity Distribution Company (IBEDC).

Eko Distraction Company (EKEDC) was not listed.

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The letter entitled  “This regulatory instrument shall be cited as Multi-Year Tariff Order (MYTO-2022) for Port Harcourt Electricity Distribution Company Plc (PHED”). said the tariff hike takes effect from 1st January, 2022, but the new rate is from February 2022, the letter indicated.

The document explained that “Consequently, following the approval of PHED’s Performance Improvement Plan (PIP) on 30th April, 2021, the Commission issued the MYTO-2021 Extraordinary Tariff Order effective from 1st July 2021 in consideration on PHED’s CAPEX proposals over a 5-year plan in line with the approved PIP.

“Accordingly, this MYTO-2022 order restates PHED’s approved 5-year CAPEX and relevant assumptions applied to forecast revenue requirements and applicable tariffs for the period 2021-2026 in line with MYTO Methodology and Regulations Procedure for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry (NESI).

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It is programmed from 1st July 2021 to 30th June, 2026.

The document showed that for the PHED (A-Non MD) customers who paid N56.16/kwh in January 2022 will now (February to December 2022) pay N60.67/kwh).

Similarly, (B Non-MD) customers who paid N56.64/kwh in January 2022, will now pay N59.64/kwh.

The document noted that E- MD2 customers who paid N50.72/kwh in January 2022, will now (From February 2022) pay N54.22/kwh .

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