NERC directs DISCOs to increase tariff from April 1

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The Nigeria Electricity Regulatory Commission (NERC) has directed the 11 electricity distribution companies (DisCos) to hike their tariffs by average of 50 percent on April 1.

Ikeja Electric (IE) Plc, which made this disclosure in its memo to the commission, noted that the directive is “in order to meet the tariff shortfall funding target from 2020 by the Federal Government of Nigeria.”

Owing to the directive, the 50 percent tariff increase is expected to raise the average tariffs from the current level of 27.30 N/kWh to 40.95 N/kWh, according to the Chief Executive Officer, Anthony Youdeowei.

The memo was dated February 12, 2020.

The power distributor titled the document: “Re: Addendum to Ikeja Plc’s Performance Improvement Plan and application for extraordinary tariff review of MYTO-2015.”
NERC, according to the IE document, said: “The objective for the extra-ordinary tariff review of MYTO-2015 is to ensure Ikeja Electric adjusts its tariff in line with the commission’s directive that current average allowed tariff shall be grossed-up 50% from April 2020.”

IE informed the commission that in line with the directive “we have designed the tariffs based on the MYTO tariff model contained in the document, ‘Ikeja DisCo Tariff Model Jan 2020’ shared with IE by the commission.

“In this application, we intend to create a new tariff class, called Bilateral; a class that is being created for customers that IE has a signed Power Purchase Agreement (PPA) with under a willing-buyer-willing seller arrangement. In order to provide an efficient and reliable service to customers in this tariff class, cost-reflective tariffs are required to cover the cost of service delivery.

“Our total bilateral energy procured is currently 200MW, however, bilateral sales in this application, is only the portion of the bilateral energy that has been contracted with customers on a willing-buyer-willing seller arrangement.”

The power firm said that the expected MYTO 2020 and bilateral revenue requirement are collected sales (GWh) in MYTO is 3,955mw, and bilateral 161mw, total 2020 for 4,116mw.

According to IE, the collected energy sales based on the 50 percent tariff increase in MYTO is 3,955GWh, while of the bilateral sales is 161GWh.

It also noted that the expected MYTO 2020 and bilateral revenue requirement, are N162billion and N8billion respectively, to give a total revenue requirement of N170billion.

The IE said that the “50 percent tariff increase is expected to raise the average tariffs from the current level of 27.30 N/kWh to 40.95 N/kWh.”

The document added that “the addition of bilateral sales revenue requirement further increases the average tariffs to 41.31N/kWh. Over the next five years (2020-2024), we have assumed the bilateral revenue requirement forms part of the title allowed revenue.”

The Executive Director, Research and Advocacy, Chief Sunday Oduntan, Association of Nigerian Electricity Distributors (ANED) said that the 11 electricity distribution (Discos) will not commence the implementation of the extraordinary tariff review of MYTO-2015, until they get the go ahead from the Nigeria Electricity Regulatory Commission (NERC).

Speaking with The Nation on phone, he noted that the power firms were yet to get the go ahead from the commission.

He however, admitted that the power distributors will kickstart the implementation of the new tariff when the commission gives the directive.

His words: “The DisCos cannot do anything until the regulator says so. The regulator has not asked us to charge the new tariffs. They (NERC) has the say. Once they ( NERC) says we should start, we will start charging.”

NERC’s General Manager, Public Affairs, Dr. Usman Abba Arabi, didn’t pick calls to confirm whether the new tariff will become effective on April 1.

He also did not reply to text messages that The Nation sent to him on the matter.

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