When the 11 Distribution Companies (DisCos) requested for a tariff increase, a lot of its customers took to different social media platforms expressing their displeasures.
While some of them alleged that the DisCos wanted to fleece them, others actually thought it is illegal for the companies to consider such move.
Clearing the air, the Nigerian Electricity Regulatory Commission explained that it has been notified of the development. The apex regulator stated in its Corrigendum, which was published in national dailies, that the DisCos’ notice on the review is issued in line with the Business Rules of the Commission to solicit for comments from the general public on the Extraordinary Tariff Review.
On the side of the commission, the document also stated that NERC has constituted two Hearing Panels to conduct the hearing of the various applications filed by DisCos and TCN. According to the regulator, the panels will hold their sittings as per the schedule published across national dailies and all interested parties are invited to attend.
It stated, “Any person wishing to participate in the proceedings as an intervenor should forward his/her application to NERC. The request to participate shall be in an electronic copy in Microsoft Office format or by e-mail and shall include an explanation of the person’s interest in the proceeding and how the party would be affected by the outcome of the application.
“A description of the party’s concerns, observations comments and/or objections to the application and an indication as to whether the party supports or objects to the application submitted by the licensees. Such a request should be forwarded to the commission within one week of this publication.”
In its letter, which was seen by Nairametrics, Ikeja Electric, one of the 11 DisCos, explained that the increase was to ensure the company adjusts its tariff in line with the Commission’s directive that current average allowed DisCo tariffs shall be grossed-up by 50% from April 1, 2020, in order to meet the tariff shortfall funding target for 2020 by the Federal Government.
“We intend to create a new tariff class, called Bilateral. This class is being created for customers that IE has signed a Power Purchase Agreement (PPA) with under a willing-buyer-willing-seller arrangement.
“In order to provide an efficient and reliable service to customers in this tariff class, cost-reflective tariffs are required to cover the cost of service delivery.”
Nairametrics earlier reported that the Power sector had set April 1, 2020, for tariff increase in line with NERC December 2019 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2020 for the 11 DisCos. But the expected upward review drew criticism from Nigerians, forcing the House of Representatives to direct the suspension of the tariff increase.
Aside from the tariff hike demand, the DisCos want:
- the Grid Load (Energy) Allocation to the various DisCos be reviewed;
- review of Ancillary Service Charge;
- to consider a revised tariff classification and the creation of new customer classes;
- to reallocate load amongst the various customer classes with a view to ensuring that DisCos’ revenue requirement recovered through rates is fair, just and reasonable and based on the costs each customer class impose on the network; and
- to consider a gradual transition to cost-reflective tariffs (based on approved prudent expenditure) for the provision of much-needed investment in the networks.
The Transmission Company of Nigeria (TCN) also demanded a review of its operating revenue to reflect its additional investment, which is yet to reflect in its Regulatory Asset Base (RAB).