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Controversies trails electricity tariff increase




Few days after the expiration of the July 1 deadline for review of electricity tariff, the civil society organizations have disclosed that none of the distribution companies in country have consulted them to discuss the framework for the tariff review.

It would be recalled that the Nigerian Electricity Regulatory Commission’s- NERC issued a directive to the electricity distribution companies- DISCOs to consult with consumers before approaching it for ratification of the new tariff. While some of the Distribution companies have concluded plan on meet with NERC over the increase others have disclosed that they are planning to meet with the consumers.

According to Mr. Tomi Akingbogun, the Interim Steering Committee Chairman of NECAN, some of the Discos have concluded plan to meet with NERC without proper consultation with the credible stakeholders. According to him, none of the DISCOs has invited its members for a meeting to discuss the guideline for tariff increase.

‘‘As a consumers’ advocacy group we have not received any request from any. We are still waiting for invitations from them. Although we are aware that some of the DISCOs claimed to have met with the consumers, but we sure will be willing to know the categories of customers that they met with.’’ Akingbogun said.

Mr. Muda Yusuf, Director General of Lagos Chamber of Commerce and Industry has also revealed that none of the distribution companies in Lagos has consulted it for a meeting on the tariff increase.

According to Mr Francis Jacobs, President of the Manufacturer Association of Nigeria- MAN, the association is aware of plan to review the electricity tariff. He said that the association is not willing to respond until when it receives judgment from the court.

However, Mr Olanipekun Adeyanju, the spokesperson of Ikeja Electricity Distribution Company revealed that the company is planning to invite the civil society group to review the new tariff. He also noted that his company has not increased its tariff.

NERC in a statement revealed that it has issued guidelines for consultation by operators that want to review the cost of generation, transmission and supply of electricity, the prices of electricity services and classification of customers. The guidelines according to the commission are designed to ensure that such consultations are comprehensive, rigorous open to all relevant stakeholders, meaningful and effective.

“NERC will not accept and consider the application of any distribution company for Revenue Requirement (RA), Rate Design (RD) and Customer Classification (CR) if it has not completed customer consultation in line with these guidelines.”

“These guidelines set out the principles and steps the Distribution Companies should adopt for engaging stakeholders before submitting tariff review applications to the Commission. It aims to assist Discos make the right decisions about when, with whom and how to consult. The Consultation process is expected to achieve real engagement rather than merely following a routine or bureaucratic process,” NERC maintained.

The commission indicated that the consultation will create accountability in the electricity market as customers will know how the operators are serving them and the various costs of service that justify the rates they are paying. It also revealed that no electricity distribution company has received approval to increase tariffs payable by customers.

He stated that there were procedures to be followed before the Discos would receive approval from the commission with respect to tariff hike, and stressed that consumers should report any power firm that failed to follow laid down guidelines.

He also said that if consumers have objections against the consultation, they should write to NERC. According to him, NERC’ guideline says that if the Discos do not go through that process, they will not have their tariff applications considered.

“In the guideline, we said you must give notice to your consumers and this must be on your website for three weeks, and you must include everything you want to apply to NERC for them to consider. They must give us a report detailing who and who attended and the issues discussed; after which we will now call for public review or comments on that report.”

Amadi maintained that no Disco had come to NERC to present an application demanding an increase in tariffs, adding that this was because none of them had successfully gone through the process stated earlier.


When our correspondent reminded the chairman of the announcement made in January by the commission that residential customers would start paying increased electricity bills beginning from July this year, he said the low rates paid in the past six months were due to a freeze put on the tariffs by the regulator.

Amadi said, “Tariff review is a general thing but that about residential consumers’ freeze is different. A freeze means the tariffs have been approved but are not to be operated yet. So, that’s a different thing.”

NERC had in January announced that the increase in electricity tariff would become effective for all categories of consumers in July this year.

This means that residential consumers, who constitute about 80 per cent of power users in the country, will pay new rates.

According to the commission, the bulk of the power consumers would have started paying higher tariffs from the first day of this year if not for the freezing of the increased rates for residential users for a six-month period.

‘‘After a recently conducted special review, NERC approved a revised Multi Year Tariff Order 2.1, which came into effect on January 1, 2015. A major highlight of the MYTO 2.1 is a six-month freeze from January 1, 2015 on tariff increase for residential consumers, who constitute about 80 per cent of the electricity consumers, known in the industry as R2 customer class, in the country.” Amadi revealed.

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