DisCos apply for electricity tariff hike – NERC

NERC, Disco
NERC, Disco

DisCos apply for electricity tariff hike – NERC

Eleven electricity distribution companies (DisCos) in Nigeria have recently applied for a review of their electricity tariffs.

The Federal Government has disclosed this information through a notice published by the Nigeria Electricity Regulatory Commission (NERC).

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The DisCos are seeking the rate review to incorporate changes in macroeconomic parameters and other factors affecting their operations and sustainability.

In a notice obtained by Channels Television, NERC explained that the Discos’ request for a rate review is based on the provisions of Section 116 (1) and 2(a&b) of the Electricity Act 2023, along with other relevant regulations.

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Previously, there was public outcry and resistance when some electricity distribution companies attempted to increase tariffs from July 1.

The Nigerian Labour Congress (NLC) criticized the move, urging the government to reconsider the hike due to the ongoing hardships faced by consumers following the removal of petrol subsidy.

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As a result, the planned tariff increase was postponed. However, with the recent application for rate review by the Discos, the possibility of an increase in tariffs remains.

NERC emphasized that it will conduct a Rate Case Hearing to review the applications before making a ruling. This process is part of the rule-making procedure and is within the powers granted by the Electricity Act.

The Commission invited the general public and stakeholders to provide comments or representations on the rate review applications filed by the distribution licensees.

Interested parties were advised to review the excerpts of the applications and submit their feedback before the deadline of July 20, 2023. The NERC tariff review process is designed to undertake major reviews every five years, with additional extraordinary tariff reviews triggered by specific circumstances.

In the rate review application of Ikeja Electricity Distribution Company, one of the Discos, it highlighted that the current tariffs consistently fall below cost-reflective levels, which puts pressure on the companies and the government to subsidize the tariff gaps.

This misalignment with business realities undermines the ability of the Discos to fulfill their obligations under the Performance Agreements and Vesting Contracts, further exacerbating the liquidity challenges in the electricity sector.

Similarly, Abuja Electricity Distribution Company requested that the Commission consider the amended end-user rate, as it better reflects the present business realities for the sake of continuity and sustainability.

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