NERC’s Inclusive Tariff Policy

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Amadi
Amadi

THE Nigerian Electricity Regulatory Commission, NERC, decision to initiate and sanction a joint tariff design process by electricity consumers and distribution companies was based on three key reasons. Sam Amadi, chairman, NERC,  said in addition to applying the standard practice of allowing distribution companies come up with data that form its final design and roll out electricity rates to be paid by consumers, it has decided to further deepen the service relationship between electricity consumers and distribution companies by the joint tariff review process.

According to him, the new policy was informed by the need to expand the knowledge of consumers on the operations of the distribution companies to enable them make informed criticism of their actions, get the distribution companies to empathise with consumers in making demands for higher tariffs as well as push the distribution companies to come up with and defend credible data for the tariff review.

NERC recently disclosed that it was ceding parts of its regulatory responsibilities of transparently determining an appropriate tariff to be paid by consumers in Nigeria’s electricity industry to both consumers and distribution companies in the sector. It noted that the decision on joint consultation and determination of electricity rates by consumers and distribution companies was based on the need to foster transparency and inclusiveness in the way electricity rates are decided and paid in the sector.

Amadi stated that both consumers and distribution companies would now have to sit down together to discuss and determine a mutually acceptable cost reflective tariff to be paid by consumers. He explained that NERC, which would take up an independent umpire role in the process, would also review the propositions and indices presented by the distribution companies during and after the consultation with consumers before signing off the mutually agreed tariff to be used by the distribution companies.

He also said the new process would eliminate extant bickering on any tariff rolled out in the sector, adding that consumers now have the opportunity to critically examine propositions made by distribution companies for tariff review. “Let us understand one thing, the new initiative or approach to tariff design in this sector is not totally new. In most jurisdictions in the world, it is the Discos that prepare their bill and even in the NERC here but then they don’t always do a robust wok on the process but based on that we try to help design a tariff that is fair and affordable to all parties involved. What is happening here is that we are saying to the Discos, take charge of your network, look at your system and then come to us and tell us what they think is the cost at which they need to provide efficient electricity service to their consumers,” Amadi said.

— Apr. 27, 2015 @ 01:00 GMT

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