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Power: Residential consumers to pay more from July

By on January 8, 2015

The increase in electricity tariff will become effective for all categories of consumers in July this year. This means that residential consumers, who constitute about 80 per cent of power users in the country, will from that date pay new rates.

According to the Nigerian Electricity Regulatory Commission, the bulk of the power consumers would have started paying higher tariffs from the first day of this year if not for the freezing of the increased rates for residential users for a six-month period.

The Chairman, NERC, Dr. Sam Amadi, said, “You may recall that after a recently conducted special review, NERC approved a revised Multi Year Tariff Order 2.1, which came into effect on January 1, 2015.

“A major highlight of the MYTO 2.1 is a six-month freeze from January 1, 2015 on tariff increase for residential consumers, who constitute about 80 per cent of the electricity consumers, known in the industry as R2 customer class, in the country.”

Amadi spoke at the commission’s headquarters in Abuja on Tuesday during a press briefing.

Asked by our correspondent to be specific if there was going to be an increase in electricity tariffs for residential consumers at the expiration of the six months, Amadi replied that the outcome of the minor electricity tariffs review to be held during the period would determine if the rates would be hiked.

He said, “For now, the freeze on tariff increase is between January and June. Don’t forget that NERC does not fix tariffs arbitrarily and don’t forget that we have our minor reviews, whose outcome will take effect after that period of time.

“So essentially, with all the improvements we are anticipating, the minor review will be done and depending on the outcome, the commission will factor all the gaps and it will be published for all to see. But when we say for now, it means that clearly there is no increase for residential consumers between January 1 and June 2015.”

The NERC chairman explained that the decision to grant the six-month moratorium was arrived at after consultations with stakeholders, stressing that the freeze was designed primarily to protect and to promote the interests of the consumers as well as stimulate the operators to serve the customers better.

He stated that the electricity distribution companies were not happy with the development as they would not be able recoup their growing and previously unanticipated costs, adding, “This will negatively affect their bottom-line in the short run. But while we have a responsibility to protect consumers, NERC is not anti-business.

“The intention, therefore, is to give the consumers a break for six months and provide the operators incentives to improve supply and services. Essentially, NERC has decided to grant a six-month waiver of full tariff to the bulk of electricity consumers because the commission strongly believes that it will be unfair to ask them to pay a higher tariff now given the current level of service delivery and consumer perception.”

He stated that it was expected that the electricity distribution companies would use the period to provide meters for their customers, adding that the government was working out ways to ensure the provision of supplementary meters to help bridge the huge metering gap.

“This moratorium is a regulatory mechanism for incentivising operators to improve power supply and be more responsive to the needs and complaints of their customers, especially in the area of metering,” Amadi said.

 

[Punch]