The Nigerian Electricity Regulatory Commission has issued new regulations detailing the procedure for electricity tariff reviews.
This comes amid widespread speculation about an impending tariff increase.
In its latest directive, signed by the Chairman Sanusi Garba, NERC clarified that electricity tariffs are subject to review every five years under the provisions of the Multi-Year Tariff Order (MYTO) methodology.
The commission emphasized that all tariff assumptions are assessed periodically to ensure the industry remains viable and efficient.
According to NERC, one year before a major tariff adjustment, the commission will notify all electricity distribution companies (DisCos) and require them to submit applications for tariff reviews within 120 days of receiving 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,” NERC stated.
The directive specifies that the notice will be published in three national newspapers and on NERC’s official website.
Licensees must support their tariff review applications with key documentation, including audited financial statements, budgets, investment plans, and evidence of customer consultations in their service areas.
NERC further outlined that once applications are received, a consultation paper will be developed within 90 days after the submission deadline.
This document will provide a breakdown of the proposed tariff adjustments, covering factors such as, Capital investments, Service improvements, New customer connections, Strategies for reducing losses, Adjustments to tariff assumptions, Potential impacts on customer electricity rates.
“The consultation paper shall be published on the commission’s website and public notices issued soliciting comments with a timeline of 21 days for stakeholder submissions,” NERC explained.
Following this, the commission will review public feedback and conclude a Rate Case Hearing within 90 days of publishing the consultation paper.
After considering stakeholder responses, NERC will approve and issue a major tariff review order within 30 days from the date of the rate case hearing.
DisCos will then be responsible for informing customers about the revised tariffs through their websites and other communication channels.
This regulatory update follows NERC’s recent decision on April 3, 2024, which approved a threefold increase in electricity tariffs for customers classified under Band A.