NERC Commences Review of Electricity Tariffs

Chineme Okafor

The Nigerian Electricity Regulatory Commission (NERC) yesterday said it had commenced the process of reviewing electricity tariff that would be used by distribution companies (Discos) in Nigeria for the next five years, which is between 2019 and 2023.

The commission said in a statement from its Head of Media Unit, Mrs. Vivian Mbonu, in Abuja that the process would commence with the review of the Performance Improvement Plans (PIP) to be submitted by the Discos.

It added that the process would ensure that the eventual tariff to be charged would be fair to stakeholders in the market.

It also explained that it had not jettisoned its Multi Year Tariff Order (MYTO) framework as recently reported in the media, adding that it had however begun a review of the MYTO financial model to ensure its integrity and consistency with extant realities in the country’s electricity industry.

“Following recent inaccurate reports in the media, the Nigerian Electricity Regulatory Commission hereby reaffirms that there are no plans to dump the Multi Year Tariff Order (MYTO) framework used in determining end-user tariffs based on revenue requirement of the electricity industry.

“As part of the periodic evaluation of software models utilised by the commission, the commission plans to review the MYTO financial model to ensure its integrity and consistency of the platform with approved tariff principles pursuant to the numerous updates undertaken since inception of the methodology in 2008,” said the statement.

Additionally, NERC said: “The holistic review of the MYTO model also includes aligning the basic assumptions and parameters with the underlying principles of the tariff methodology and ascertaining the full workability of the macros and other formulae.

“This is an important initiative of the commission as we prepare to commence review of Performance Improvement Plans (PIP) to be submitted by utilities for the tariff period 20192023,” NERC explained, noting that: “The commission will continue to use the MYTO as the framework for determining tariffs, and in line with the provisions of the EPSR Act 2005, ensure that prices charged by licensees are fair to consumers and are sufficient to allow licensees recover the efficient cost of their business activities whilst earning a reasonable return on the capital invested in the business.”