Power
By Anayo Ezugwu
THE Nigerian Electricity Regulatory Commission, NERC, has approved new electricity tariffs for the distribution companies, Discos, operating in the country. NERC said the new tariffs, which are distinct to each Disco, became effective from July 1, 2019.
In a new order posted on its website, NERC described the new tariffs as ‘2016-2018 minor review of the Multi Year Tariff Order, MYTO, 2015 and minimum remittance order for the year 2019.’
It explained that the Discos would have to remit a minimum of 45.4 percent of their monthly invoices to the Nigerian Bulk Electricity Trading Plc, NBET. It also noted that all Discos would meet up to 100 percent of their monthly invoices from the Market Operator, MO, in addition to attracting severe penalties for failing to adhere to their remittance obligations to the NBET or MO in any of remittance cycles.
According to the NERC’s order, the Discos would also maintain unencumbered and adequate letters of credit covering a period of three months for electricity services to them. Under the new tariffs, NERC disclosed that residential customers in the networks of Abuja Disco will have to pay between N24.30 and N47.09 per kilowatt hour (kwh) of electricity in 2019, and between N33.34kwh and N63.42kwh in 2021.
Commercial customers under the same network will pay between N37.39kwh and N47.09kwh in 2019 as well as N50.28kwh and N63.42kwh in 2021. For industrial customers in Abuja, their tariff in 2019 would range from N36.07kwh to N47.09kwh, while that of 2021 would be between N48.49kwh and N63.42kwh.
Under the Eko Disco, residential customers will in 2019 be charged between N24 and N29kwh. In 2021, they will be charged N32.42khw and N42.83kwh. Commercial customers will pay in 2019 between N24 and N36kwh, while in 2021, they will be charged between N33.61kwh and N47.70kwh.
For industrial customers in Eko, they will be charged between N24 and N36kwh in 2019, but in 2021, they will have to pay between N36.23 and N48.52kwh.
Similarly, in the networks of Enugu Disco, residential consumers will be charged between N30.93 and N46.08kwh in 2019, as well as N36.45 and N53.42kwh in 2021. Under the same network, commercial customers will pay between N34.28 and N45.85kwh in 2019, and then N40.40 and N54.03kwh in 2021.
For industries, the Disco’s network, they will be charged between N40.37 and N46.83kwh in 2019, and then between N47.57 and N55.18kwh in 2021. “This order has taken into consideration the actual changes in relevant macroeconomic variables and available generation capacity in updating the operating MYTO – 2015 Tariff Order for the period January 1, 2016 to December 31, 2018 in line with the provisions of the MYTO Methodology (Amended).
“Projections were made for macroeconomic variables for the year 2019 and beyond based on best available information. The commission shall make necessary adjustments to reflect actual values at the time of the next minor review that will take effect on January 1, 2020.”
It explained that it did the review to reflect the impact of changes in the minor review variables for the period 2016 to 2018 to determine the cost reflective tariffs for the relevant years, and equally ascertain revenue shortfalls in view of the differential between such tariffs and allowed tariffs in the market.
NERC added that it recognised the historical tariff deficits of the Discos, which affected their financials, and developed a framework to manage future revenue shortfalls in the industry including minimum market remittance requirement to account for differences between cost reflective tariffs and allowed tariffs in the settlement of invoices issued by the NBET and MO.
The tariff review process, it stated would reaffirm the payment securitisation requirement and flow of funds from Discos to NBET and the MO, as well as steer the market to gradual activation of market contracts in line with the requirements of the Transitional Electricity Market (TEM).
With regards to the parameters for the review, it explained that the average naira to dollar exchange rates of N255.90; N308.80; and N309.14 were used for the years 2016, 2017 and 2018 respectively, while the exchange rate for 2019 was computed as N306.90 plus one percent premium to a dollar.
The price of natural gas for the power sector, it noted, was $2.50/MMBTU and gas transportation cost of $0.80/MMBTU for the review. The regulatory commission also indicated that it has computed and recognised the tariff shortfall for the Discos for the years 2015 to 2018.
“Under the Power Sector Recovery Plan (PSRP) approved by the federal government, all accrued liabilities in Disco’s financial records arising from tariff shortfalls shall be transferred off the balance sheet and fully settled under the financing plan of the PSRP initiative,” it said.
– Aug. 23, 2019 @ 14:55 GMT |
Tags: NERC approves new electricity tariffs for Discos
