Financial Energy Review
THE Nigerian Electricity Regulatory Commission (NERC) on Thursday, released documents confirming tariff increase approval for six Distribution Companies (DisCos) which became effective in January 2022.
The document ORDER NO: NERC/299/2021 titled: the multi-year tariff Order 2021 was dated 29th December, 2021 and jointly by the Commission’s Chairman, Sanusi Garba and Vice Chairman, Musiliu Musiliu Oseni.
The DisCos are Port Harcourt Electricity Distribution Company (PHEDC); Jos Electricity Distribution Company (JEDC); Kano Electricity Distribution Company (KEDC); Kaduna Electricity Distribution Company (KEDC); Ikeja Electricity Distribution Company (IKEDC) and Ibadan Electricity Distribution Company (IBEDC).
According to the Commission, the approval was pursuant to the Extraordinary Tariff Review Application and Performance Improvement Plan (PIP) filed by each of the DisCos. It said the MYTO 2022 Order restates the DisCos approved 5-year Capital Expenditure (CAPEX) and relevant assumptions applied to forecast revenue requirements and applicable tariffs for the period 2021 to 2026 in line with the MYTO Methodology and Regulations on procedures for Electricity tariff reviews in the industry.
The commission stated that indices with potential impact on electricity rates were considered for the review.
These, it said, include inflation rate, exchange rate, US inflation rate, available generation capacity, gas price among others.
“These indices shall be reviewed every six months to update the tariffs with changes in the indices as applicable in line with the MYTO Methodology,” it stated.
For instance, the document titled ‘This regulatory instrument shall be cited as Multi-Year Tariff Order (MYTO2022) for Port Harcourt Electricity Distribution Company Plc (PHED)’, reads in part: “Consequently, following the approval of PHED’s PIP on 30th April 2021, the Commission issued the MYTO-2021 Extraordinary Tariff Order effective from 1st July 2021 in consideration on PHED’s CAPEX proposals over a 5-year plan in line with the approved PIP.
“Accordingly, this MYTO2022 order restates PHED’s approved 5-year CAPEX and relevant assumptions applied to forecast revenue requirements and applicable tariffs for the period 2021-2026 in line with MYTO Methodology and Regulations Procedure for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry (NESI).”
The document stated that for A-Non MD customers who paid N56.16/kWh in January 2022 will now (February to December 2022) pay N60.67/kWh). Also, B Non-MD customers who paid N56.64/kWh in January 2022 will now pay N59.64/kWh.
It added that E-MD2 customers who paid N50.72/ kWh in January 2022 will now (From February 2022) pay N54.22/kWh.
Also, the Commission noted that having considered the comments received during the consultation process for the review of the Transmission Loss Factor (TLF) in the NESI, it approved, as part of this Extraordinary Tarif Review, a new benchmark (TIF) of 7.5% effective from Ist January 2022.
It said this is to reflect the level of improvement in TLF to support necessary adjustments in the determination of industry tariffs and minimum loss allowances to be considered by generators on the transmission network. The Commission put the TLF Improvement Trajectory from 2022-2026 at 7.50%, 7.25% 7.00%, 6.75%, 6.50% respectively for the period.
