NERC Issues New Guidelines for Electricity Tariff Reviews
The Nigerian Electricity Regulatory Commission (NERC) has introduced fresh regulations detailing the procedures for electricity tariff reviews. This development follows recent speculation about an impending increase in electricity tariffs.
In an official order signed by NERC Chairman Sanusi Garba, the commission clarified that electricity tariffs would undergo a review every five years in line with the Multi-Year Tariff Order (MYTO) methodology. The aim, according to the commission, is to ensure the financial viability and operational efficiency of the power sector.
NERC outlined that one year before a major tariff adjustment, it would issue a public notice to all electricity licensees, informing them of the intended review. Licensees will then be required to submit applications for tariff adjustments within 120 days of the notice, accompanied by supporting documentation.
“The commission shall, one year before the expiration of the major tariff review order in force or as may be considered necessary, issue a notice to all licensees about its intention to commence the process for a major review of the existing tariff,” the order states.
To ensure transparency, NERC mandates that such notices be published in at least three national newspapers and on the commission’s official website. Licensees must submit audited financial statements, budgets, investment plans aligned with Performance Improvement Plans, and evidence of extensive customer consultations regarding the proposed tariff changes.
NERC also established a structured timeline for processing tariff review applications. Once the submission deadline lapses, the commission will develop a consultation paper within 90 days, summarizing the justifications for tariff adjustments as presented by the licensees.
The consultation paper will outline proposed capital investments, service enhancements, expansion plans, loss reduction strategies, and any adjustments to tariff assumptions. Additionally, it will assess the potential impact of these changes on electricity consumers.
“The consultation paper shall be published on the commission’s website, and public notices shall be issued, inviting stakeholder comments within 21 days,” NERC stated.
Following this, NERC will review all comments and conduct a Rate Case Hearing within 90 days, ensuring all stakeholders have an opportunity to contribute to the decision-making process.
After the hearing and careful evaluation of stakeholder feedback, NERC will finalize and approve any major tariff adjustments within 30 days. Once approved, the affected licensees are required to communicate the revised tariff structure to their customers via their official websites and other communication channels.
This regulatory update follows NERC’s recent decision on April 3, 2024, to implement a threefold increase in electricity tariffs for customers categorized under Band A, a move that sparked widespread debate among industry stakeholders and consumers alike.
