Electricity: Why industry regulator reduces tariff for Band A consumers, retains others –NERC

*The Nigerian Electricity Regulatory Commission announces a downward review of electricity tariff for Band A power consumers to N206.80 per kilowatt-hour from the N225/kWh following the recent appreciation of Naira in the official Foreign Exchange (Forex) window

Isola Moses | ConsumerConnect

The Nigerian Electricity Regulatory Commission (NERC) Monday, May 5, 2024, announced the Federal Government has directed the downward review of electricity tariff for Band A customers to N206.80 per kilowatt-hour from the N225/kWh.

NERC noted in a statement that the development resulted from the appreciation of the Naira, Nigeria’s currency in the official exchange window.

The country’s power regulatory Commission stated: “Effective from May 6, 2024, Band A end-user tariffs have been reviewed to NGN206.8/ kWh under MYTO 2024.

“This is largely driven by the relative appreciation of the Naira in the official Foreign Exchange (Forex) window.”

It is noted that decision to crash the Band A tariff for electricity consumers in particular, may not be unconnected with the recent public outcry over the increase in electricity tariff.

Some industry observers, Civil Society Organisations (CSOs), and Organised Labour among others have described the recent increment as “insensitive” in regard to the current economic challenges consumers are faced with in the country.

Subsequently, the electricity Distribution Companies (DisCos) have commenced a reduction in tariffs for Band A customers following communication to electricity consumers in their respective franchise areas.

ConsumerConnect reports in notices to power consumers from Monday, the DisCos affirmed their support for improved service delivery to customers under the specified category.

The Ikeja Electric (IE) had in an earlier notice, said the reduced electricity tariff payable by its Band A customers had been slashed to N206.80 per kilowatt-hour from the N225/kWh, as approved by the Nigerian Electricity Regulatory Commission (NERC).

The DisCo said in a statement: “Please be informed of the downward tariff review of our Band A feeders from N225/kwh to N206.80/kwh effective 6th May 2024 with guaranteed availability of 20-24hrs supply daily.”

Likewise, the Eko Electricity Distribution Company (EKEDC), and the Abuja Electricity Distribution Company (AEDC), communicated similar notices to their customers.

The power providers affirmed the development was in alignment with the cost-reflective tariffs framework introduced in 2020.

However, the tariffs for Bands B, C, D, and E consumers remain unchanged.

In a statement via its verified X account also, the Abuja Electricity Distribution Company Plc (AEDC) confirmed a review of tariff for Band A customers.

It said: “Dear Customers, this is for your information. #AEDC #Abujadisco #PowerofCommitment — aedcelectricity (@aedcelectricity) May 6, 2024.

Sani Sani, Head of Corporate Communications at Kano DisCo, in a statement on Monday, also said the downward review of the tariff followed an order by NERC.

Sani stated: “Further to section 23 of the MYTO 2024 which took effect from 1st January 2024, and the subsequent April 2024 Supplementary Order which saw an increase in the Band A tariffs, the May Supplementary Order seeks to reflect the changes in the pass-through indices outside the control of licensees including inflation rate, NGN/USD exchange rate, available generation capacity, and gas price for the determination of Cost-Reflective Tariffs.

“In line with the Federal Government of Nigeria’s policy direction on electricity subsidy, only Band A customer categories are affected by the minor review, and Bands B–E customer categories shall remain frozen at the rates payable since December 2022, subject to further policy direction by the Government.”

The Kano DisCo Head of Corporate Communications also explained that the newly approved tariffs would remain in force and would be subject to “monthly adjustments of pass-through indices including inflation rates, NGN/USD exchange rates, and gas- to-power prices.”

Reacting to the development, Abubakar Yusuf, KEDCO’s Managing Director, reportedly welcomed the tariff adjustment as a sign of the regulator’s commitment to sustainable the power sector growth.

Yusuf restated the company’s commitment to continuous service delivery improvement as agreed under service-based tariff (SBT) proposals.

The Kaduna DisCo said the review affects both prepaid and postpaid customers.

The DisCo assured customers on its Band A feeders “of continued availability of 20-24hrs supply daily as stipulated in the Service Based Tariff regime.”