Monday, 29 June, 2020

New Electricity Tariff: NERC Cannot Shave Our Heads Behind Our Backs, Expert Says




The adjustment to electricity tariffs made by the Nigerian Electricity Regulatory Commission last Wednesday, has been described as an attempt at outwitting regulations guiding power price increases.

Convener of Nigerian Consumer Protection Network, Kunle Olubiyo, told Sahara Reporters on Monday that the commission cannot carry out a ‘major review’ without due consultation.

The commission had released 11 documents for the 11 electricity distribution companies titled ‘NERC Order on 2016 -2018 Minor Review of MYTO2015+Minimum Remittance’

In a statement, the NERC insisted that it had not increased the cost of electricity but only made a ‘retrospective adjustment of the tariff regime released in 2015 to account for changes in macroeconomic indices for the years 2016, 2017 and 2018, thus providing certainty about revenue shortfall that may have arisen due to the differential between tariffs approved by the regulator and actual end-user tariffs.’

Olubiyo explained the quoted excerpt to imply that the commission had implemented a minor price hike, which it should effect every six months at once.

This means it had executed eight minor price reviews with the order dated August 19, 2019.

Olubiyo interpreted this to be a major review in itself and hinted that the major hike, which is done every three years, could be done in 2020 – just a year after the lumped minor increment.

He said, “You don’t shave a man’s head in his absence. The enabling law did not envisage that something is going to be done in retrospect or something is going to be done in lump sum.

“They have put together 2016, 2017, 2018, 2019, four years. What they are supposed to do eight times, they have summed the total value together to implement it at once.”

In 2014, NERC released a time table of its minor review from 2015 to 2018 and it indicated that minor reviews will take place every March and September till the next major review scheduled for 2018.

However, the commission failed to execute any of the reviews as stated.

Speaking to Sahara Reporters, spokesperson for Eko Electricity Distribution Company, Godwin Idemudia, said, “I don’t know about that, we follow directives.

“NERC has the knife and the yam, I think you should ask them to explain.”

NERC uses the price of gas, the inflation rate, foreign exchange and actual generation capacity to set tariffs.

Attempts to seek clarification on NERC’s new position on electricity tariff didn’t yield positive outcomes as inquiries by Sahara Reporters was not answered.

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