The Nigerian Electricity Regulatory Commission (NERC) has issued regulations to electricity distribution companies (DISCOS) on the procedure for tariff reviews, saying tariffs are to be reviewed every five years based on the provisions of the Multi-Year Tariff Order (MYTO) methodology.
The development days after reports of a planned upward review of tariffs by the DISCOS.
In its latest order signed by its chairman, Sanusi Garba, the commission said all tariff assumptions are reviewed to ensure the industry’s viability and efficiency
NERC added that one year before a major tariff hike, 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 commission shall, one year before the expiration of the major tariff review order in force or as may be considered necessary, issue a notice to all licensees about its intention to commence the process for a major review of the existing tariff.
“The notice shall be published in three national dailies and on the website of the commission.
“The Notice shall request for submission of applications for the review of tariffs supported with documentation that includes but not limited to audited financial statements, budgets, investment plans (in line with prevailing guidelines on Performance Improvement Plans), and proof of wide consultation with customers in the licensees’ service area concerning the proposed filing of the application for tariff review and any other information as deemed necessary by the commission,” the commission stated.
It further said for a review to be done, all applications from licensees must be completed and a consultation paper developed no later than 90 days after the deadline for the submission of the applications.
The NERC further said the consultation paper developed by the commission shall outline the basis for the tariff review applications by the licensees and that the paper would also include their proposals on capital investments, service improvements, new connections, loss reductions, reset of tariff assumptions if any, and possible impact on rates payable by the affected customers.
“The consultation paper shall be published on the commission’s website and public notices issued soliciting comments with a timeline of 21 days for submission by stakeholders,” NERC said.
“The commission shall within 90 days from the publication of the consultation paper review all comments and schedule and conclude a Rate Case Hearing, having regard to the stakeholders’ responses to the consultation paper,” it added.
The regulator also said it would consider and approve a major tariff review order within 30 days from the date of the rate case hearing and proper consideration of the outcomes of the general stakeholders’ presentation.
“Any licensee whose tariffs have been reviewed shall communicate the outcome of the tariff review to its customers via its website and other communication channels,” NERC added.
On April 3, 2024, NERC approved a threefold increase in electricity tariff for customers under the Band A classification.
