As controversies trailed the purported electricity tariff hike by the Federal Government, the Nigerian Electricity Regulatory Commission has issued regulations on the procedure for tariff reviews.
The latest order, signed by NERC Chairman, Sanusi Garba, stated that pursuant to the provisions of the Electricity Act 2023, the commission is obligated to review and approve a fair tariff to allow licensees to recover prudent costs and a reasonable return on capital invested in the business for the provision of electricity services.
It stated that Section 116(1) of the Act provides that activities in the generation, transmission, distribution, trading, supply, system operation, and electricity distribution franchising shall be subject to tariff regulation, saying Section 116(2) further provides for the commission to develop a tariff methodology that allows licensees operating efficiently to recover the full efficient costs of their business activities, plus a reasonable return on investments by shareholders.
NERC stressed that the Multi-Year Tariff Order methodology provides for a major review of electricity tariffs every five years, during which all tariff assumptions are reviewed to ensure the industry’s viability and efficiency.
One year before the major tariff hike, the commission said it would issue a notice to all licensees about its intention while requesting them to submit applications for the review of tariffs supported with necessary documentation within 120 days of the notice.
The regulator said an initial review of the applications shall be completed and a consultation paper developed no later than 90 days after the deadline for the submission of the applications.
