The Nigerian Electricity Regulatory Commission (NERC) has declared that state governments and their regulatory agencies lack the authority to unilaterally reduce electricity tariffs for power supplied from the national grid.
The Commission made its position known in a Public Notice titled “Application of Multiple Tariff Regimes in Nigerian Electricity Supply Industry” on Thursday.
The public notice came on the heels of the controversy over the Enugu Electricity Regulatory Commission (EERC) reduction of tariff for the Band A customers in its franchise areas from N209 per kWh to N160/kWh.
While operators in the NESI value chain, such as the electricity Distribution Companies (DisCos) and electricity Generation Companies (GenCos), have condemned the downward review, EERC has based the rate of crash on the sufficiency of the Federal Government.
NERC and the utility providers in NESI have, however, expressed fears that the other states’ electricity commissions might toe the line of Enugu.
But NERC stated, “As states do not have jurisdiction over the national grid and over electric power stations established under federal laws/operating under licenses 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 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 a 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 utilisation 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.
“All stakeholders are advised to note that the Commission 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.”
What you should know
Earlier, the Forum of Commissioners of Power and Energy in Nigeria (FOCPEN) declared its support for the Enugu State Electricity Regulatory Commission (EERC)’s decision to reduce the electricity tariff for Band A customers under MainPower Electricity Distribution Limited, despite backlash from power generation companies (GenCos).
This was contained in a statement jointly signed on Wednesday by the Chairman of FOCPEN and Commissioner for Power and Renewable Energy, Cross River State, Prince Eka Williams, and the Secretary of the Forum and Commissioner for Power, Renewable Energy and Transport, Benue State, Barr. Omale Omale.
- The group noted further that while Enugu state has, based on its specific market conditions and regulatory findings, adjusted its Band A tariffs downwards, this does not dictate a uniform approach for other states of the Federation.
- Furthermore, FOCPEN 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.
- However, the decision has drawn criticism from power generation companies (GenCos), who argue that the reduced tariff is based on flawed assumptions and could jeopardize the already fragile national power sector.
In a statement issued on Monday by the Chief Executive Officer of the Association of Power Generation Companies, Joy Ogaji, the GenCos stated that the tariff revision sets a precedent for all other states and fails to reflect the true cost of electricity generation.
Ogaji warned that the N45 per kWh being covered leaves a 60 per cent cost gap that EERC assumed would be filled by the Federal Government, despite no official or cash-backed subsidies in place.
