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Why NERC excluded residential consumers from 50% tariff reduction

By BusinessNews Staff on April 1, 2015

The Nigerian Electricity Regulatory Commission (NERC) has given concrete reasons why it excluded electricity consumers on the Residential 1 and 2 (R1 and 2) tariff cadre from enjoying the average 50 per cent slash in electricity tariff that it recently announced for certain classes of consumers.

NERC, from its clarification at a meeting with a consumer group in Abuja, the Electricity Consumer Association of Nigeria (ECAN), explained that because it had earlier excluded R1 and 2 consumers from paying the reviewed tariff that brought about the increase which other consumers are complaining about, it will not extend the reduction to the class again.

In January when the NERC reviewed and brought out new tariffs for all classes of electricity consumers in the country, in line with the dictates of the Multi Year Tariff Order (MYTO), the commission froze the application of the tariff on R1 and 2 consumers until June when it will conduct another review.

It cited poor service delivery and inadequate electricity generation and supply to that classes of consumers as its reasons for such freeze, and hoped that by June when it reviews the tariff again, these anomalies would have been corrected.

Giving clarification on the 50 per cent tariff reduction, the chairman of NERC, Dr. Sam Amadi stated at the meeting that only industrial, commercial and high-end residential electricity customers (R3) are those who would benefit from the reduction starting from the end of March, 2015.

“We have always tried to listen to complaints from consumers and operators alike and we carry out tariff reviews when necessary. We are a responsive and accountable regulator,” Amadi said at the meeting.

He further noted that: “Majority of the residential customers in R2 and R1 categories did not experience the January 1, 2015 increase in tariff. They will not also see any reversal or reduction in tariff as the industrial, commercial, and high end residential consumers whose tariff were increased.”

“It was a reduction based on the impact collection loss had on the tariff,” Amadi said, stressing that NERC took the action because it saw that there were merits in the argument put forward by the Manufacturers Association of Nigeria (MAN) which had been vocal that the January 1, 2015 tariff increase would impact heavily on their businesses.

Amadi also explained that the reduction in tariff was a decision reached in line with the Commission’s Business Rules after consideration was given to protests from MAN on the implication of January 1, 2015 increase in tariff on their businesses.

MAN had at a public forum on the tariff review, highlighted its challenges with the new tariff and warned that if left unattended to, majority of its members could be forced to close shops and put Nigerians under their employ out of work.

MAN also alleged that it was not consulted for its input by the commission in the run off to its review of the tariff, to which Amadi stated will be considered. The commission however held another meeting with MAN shortly after the public hearing where their concerns were comprehensively deliberated on for further action.

[ThisDay]

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