NERC Slashes Electricity Tariff by 50 percent

NERC Slashes Electricity Tariff by 50 percent
Dr. Sam Amadi, chairman of NERC

The Nigerian Electricity Regulatory Commission (NERC),  yesterday announced the reduction of electricity tariff by over 50 per cent, saying customers are not supposed to be billed for collection loss.

Recall that the tariff was hiked on 1st January this year, on the ground of collection loss.
The chairman of NERC, Dr. Sam Amadi, disclosed this in Abuja, stating that the Commission had absolved consumers of paying collection loss tariff. This is the amount of bills not collected by the Electricity Distribution Companies (DISCOs) but transferred to the consumers in form of tariff increase by the commission,

Amadi said that the removal of collection losses from customer tariff has reduced tariff by more than 50 percent in some places, noting that the reduction does not affect the Central Bank of Nigeria (CBN) facility and its repayment.
He continued that he had received several complaints against the increase in tariff of different consumer classes andadded that industrial and commercial consumers under the auspices of the Manufacturers Association of Nigeria (MAN) petitioned the commission, asking for a review of the MYTO 2.1 and requested drastic reduction of their tariff.

According to the chairman, they claimed that such astronomical increase in tariff would kill their businesses and lead to massive job loss.
He submitted that: “on Monday, March 9, 2015 the Nigerian Electricity Regulatory Commission (NERC) issued a new order to the effect that henceforth collection loss, which is defined as the ‘amount billed but not collected’, will not be automatically passed on to consumers of electricity. Consequently, the collection loss for all DISCOs is set at zero”.

He added “It is now the responsibility of DISCOs to convince the regulator, of any exceptional circumstances for such loss to be passed to the consumers.”
He said that this new direction comes as part of the commencement of the Transitional Electricity Market (TEM).

Amadi further stated that  “TEM is built on bilateral trading between parties and is geared towards ensuring an efficient market where cost reflectivity will lead to more affordable electric services for consumers, and as part of preparing for TEM the Commission has issued a tariff review regulation that requires the utilities to consult with relevant consumer classes before presenting a tariff review application to the commission to approve”,

He continued that “It is now the responsibility of the DISCOs to prepare and present to the Commission a tariff that will ensure that they recover their costs and ensure efficient operations.”

Amadi stressed that the “new order now amends the MYTO 2.1 and has reduced the tariff to be paid by all class of consumers. In the review MYTO 2.1 the Commission followed due process and the regulatory principles”.

He said that the Electricity Power Sector Reform (EPSR) committed the Commission to ensuring full recovery of prudent costs for efficient operators.
 According to him, the Commission is obligated to make sure that only prudent and efficient costs are passed to consumers.

He however maintained that the principle is to ensure that the distribution company operates efficiently and provide quality and affordable services to consumers.
Amadi said that ;”NERC remains committed to the principle of cost- reflective pricing and to the development of an efficient and financially viable electricity market, these are important to support the investment that is needed to ensure the electricity supply industry meets the needs of the Nigerian economy”.
“The decision to review tariff is completely compatible with the terms of the privatization and has been reviewed with the Bureau for Public Enterprises (BPE). NERC and BPE are working together to advocate for series of fiscal policies that will foster easier access to investible capital to further increase capacity and enhance reliability in the sector.” He said.


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