NERC Issues 86% Collection Orders to Discos

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Nigerian Electricity Regulatory Commission (NERC) has issued a directive that power distribution companies (DisCos) can collect about 85.84% of the newly increased electricity tariffs from affected customers between September and December 2020.

In its latest orders in the matter of the Extraordinary Review of Multi Year Tariff Order 2015, which were recently issued to the 11 DisCos operating across the country, NERC granted approval to DisCos to collect as high as over 80 per cent of the newly increased tariff from customers.

Expectedly, power consumers have kicked against the tariff hike and the decision by NERC to issue such orders.

Notwithstanding, in the orders to Discos, which were jointly signed by NERC chairman, James Momoh, and a commissioner, Dafe Akpeneye, the commission said that the new tariffs took effect from September 1.

Investigations reveal that after NERC considered the key indices used in evaluating the tariff increase applications of the power firms, it approved an average of about 85.84% as what the DisCos should collect from customers affected by the hike in tariffs.

For instance, the Abuja Electricity Distribution Company (AEDC), the NERC said its end-use cost-reflective tariff from September to December was N57.01 per kilowatt-hour and put the AEDC end-use allowed tariff during this period at N50.05/kWh.

Based on this order, AEDC would collect 87.79% as end-use allowed tariff from customers affected by the September 1 electricity tariff hike.

The power firm’s tariff shortfall during the period is 12.21%. Cost-reflective tariff is the tariff that will enable the Discos to recover their costs while the allowed tariff is what they are allowed to recover from their customers by the regulator.

The tariff shortfall will be funded by the federal government under the Power Sector Recovery Plan.

Under the PSRP Financing Plan, NERC said Nigeria has committed to fund the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs during the transition to cost-reflective tariffs.

Reports have it that other Discos also had marginal shortfalls in the respective orders issued them by NERC. In Lagos area, the Eko Electricity Distribution Company got approval to collect N47.9/kWh as end-use allowed tariff. EKEDC’s end-use cost-reflective tariff was N49.62/kWh. It implies that Eko Disco was allowed to collect as much as 96.53% as tariff from customers affected by the recent hike.

For the Benin Electricity Distribution Company, the NERC put its end-use cost-reflective tariff at N59/kWh, while its end-use allowed tariff was N50.05/KWh, meaning BEDC had been empowered to collect 84.83% from customers affected by the tariff hike.

In Enugu, the EADC had its end-use cost-reflective tariff put at N56.76/kWh, while its end-use allowed tariff was N50.05, hence the Disco would collect 88.18% as tariff regardless of the hike in the bill.

The end-use cost-reflective tariff and end-use allowed tariff for Ibadan Electricity Distribution Company were N57.6kWh and N50.05kWh respectively, hence IBEDC would collect 86.89 per cent as tariff.

In the Kano Electricity Distribution Company, NERC gave it an end-use allowed tariff of N50.05/kWh, while its end-use cost-reflective tariff was N55.73/kWh, hence it would collect 89.81 per cent tariff from affected customers.

For Ikeja Electricity Distribution Company, it would collect 96.74%, as its end-use cost-reflective tariff and end-use allowed tariff were N47.45/kWh and N45.76/kWh respectively. Jos Electricity Distribution Company would be collecting much less than the 85.84% average being collected by the 11 Discos.

Investigations show that the JEDC’s end-use cost-reflective tariff was N76.13/kWh, while its end-use allowed tariff was N50.05/kWh, hence it would collect 65.74 per cent from affected power users in its franchise area.

The Kaduna Electricity Distribution Company’s end-use cost-reflective tariff and end-use allowed tariff were N57.22/kWh and N50.05/kWh respectively, meaning it would collect 87.46% from its customers.

NERC gave the Port Harcourt Electricity Distribution Company (PHEDC) an end-use allowed tariff of N50.05/kWh and an end-use cost-reflective tariff of N64.82; hence, its customers affected by the recent hike should be willing to pay 77.21% of the applicable tariff.

For Yola Electricity Distribution Company’s end-use cost-reflective tariff and end-use allowed tariff, NERC put them at N59.99/kWh and N50.05/kWh, meaning it would collect 83.43% as tariff from affected customers of the September 1 tariff hike.

Meanwhile, NERC has said not all power users were affected by the tariff hike.

By Chibisi Ohakah, Abuja

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