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NERC to apply principles of prudence, affordability in tariff review

By on October 28, 2015

Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi has said the commission would apply the principles of prudence and affordability in the current upward review of electricity tariffs in the country.

Amadi gave the clarification against the backdrop of reports that NERC would increase the tariffs by 40 per cent.

The NERC chairman, who described the report as inaccurate, added that the review process was still ongoing.

Amadi was quoted recently to have stated that between 40 per cent and five per cent increase would be approved for the distribution companies.

But he told THISDAY that NERC had not finished the review “so there is no way of knowing the percentage increase.”
“It is all speculative; we will not know until the end of the review,” he added.

On how the 40 per cent increase credited to him, was arrived at, Amadi stated that “we said that in the tariff proposals from the discos, some have 40 per cent; some 60 per cent; some 5 per cent and so on for different customer classes.”

“At the end of the day, the final tariff that will be approved will be such that does not give the distribution company what it does not deserve and that commits the disco to quality service delivery,” Amadi added.

Due to the disagreements over the commission’s review of the Multi Year Tariff Order (MYTO) 2.1 in May 2014, NERC had directed that consumers and distribution companies would have to sit down together to discuss and determine a mutually acceptable cost-reflective tariff to be paid in the power sector.

Thus, by ceding part of its regulatory responsibilities of determining appropriate cost-reflective rates, the regulatory agency gave both consumers and Discos the opportunity to transparently determine the right costs to be paid over the next 10 years.

However, from the public outcry against the proposals of some distribution companies, it was evident that not much was achieved from the public consultations.

Abuja Disco has proposed to increase from its current average charge of N27.80 to N41.22; Benin from N29.35 to N47.26 and Enugu Disco from N27.05 to N43.16; Yola Disco proposed to increase from N28.21 to N51.52.

In fact, Enugu Disco proposed to increase R2 customers from N17.26 to N35.05, representing an increase of 103 per cent, which the Manufacturers Association of Nigeria (MAN) reportedly described as incredible.

Abuja proposed an increase for R2 customers from N14.7 to N26.34, that is, 79 per cent increase; and Benin, from N14.82 to N24.17, representing 63 per cent increase.

 

[ThisDay]