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Understanding Electricity Tariffs Paid By Consumers In Nigeria - Politics - Nairaland

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Understanding Electricity Tariffs Paid By Consumers In Nigeria by Realdeals(m): 2:43pm On Jan 08, 2014
The Nigerian Electricity Regulatory Commission, NERC, has put into operation a Multi-Year Tariff Order, MYTO, for the determination of the cost of electricity sold by distribution/retail companies for the period 1 June 2012 to 31 May 2017.

There is a specific tariff for each of the 11

electricity distribution companies, discos. The tariff covers each year of the five-year period, namely, 1 June 2012 to 31 May 2013, 1 June 2013 to 31 May 2014, 1 June 2014 to 31 May 2015, 1 June 2015 to 31 May 2016 and 1 June 2016 to 31 May 2017.

The charges are in two parts, there is a fixed monthly charge and there is a charge for electricity consumption, the energy charge.

Consumers are charged in different categories, namely, residential, commercial, industrial, special and street lighting.

We give below the charges for residential consumers using single phase or three phase meters, category R2, as a large proportion of consumers fall into this group.

We will also consider the charges in respect of Benin Disco, Ibadan Disco and Ikeja Disco. For Benin Disco, the fixed monthly charge for residential R2 category is N500 in 2012 –2013, N750 in 2013 – 2014, N1500 in 2014 – 2015, N1800 in 2015 – 2016 and 2016 – 2017.

Electricity consumption is measured in kilowatt-hour, kWh, and the energy charge is N11.37 per kWh in 2012 – 2013 and 2013 – 2014, N11.94 per kWh in 2014 – 2015, N12.54 per kWh in 2015 – 2016 and N13.16 in 2016 – 2017.

For Ibadan Disco, the fixed monthly charge for residential R2 category is N500 in 2012 – 2013 and 2013 – 2014, N625 in 2014 – 2015, N781 in 2015 – 2016 and N976 in 2016 – 2017 while the energy charge is N12.30 per kWh in 2012 – 2013, N12.91 per kWh in 2013 – 2014, N13.56 per kWh in 2014 –2015, N14.23 per kWh in 2015 – 2016 and N14.95 per kWh in 2016 – 2017.

For Ikeja Disco, the fixed monthly charge for residential category R2 is N500 in 2012 – 2013, N750 in 2013 – 2014, N895 in 2014 – 2015, N1067 in 2015 – 2016 and N1273 in 2016 – 2017 while the energy charge is N12.45 per kWh in 2012 – 2013, N12.83 per kWh in 2013 – 2014, N13.21 per kWh in 2014 – 2015, N13.61 per kWh in 2015 – 2016 and N14.02 per kWh in 2016 – 2017.

We notice that there would be increases in the charges from one year to the next year and that the charges differ from one disco to the next disco. What is important is that NERC has stated the basis used for the determination of these charges and the basis for the review of the charges.

Each of the discos came under new management towards the end of 2013 with the new management having majority shareholding and the Federal Government of Nigeria, FGN, having the minority shareholding. There has been public disquiet about the available electricity supply since the new managements were put in place.

The discos have indicated that they are not receiving as much power as they expected to receive while there is public concern about deteriorating service from the discos. NERC has indicated that the tariffs were fixed in such a manner that they are fair to consumers and that the tariffs are sufficient to allow the discos to finance their activities with reasonable earnings for efficient operation.

The new managements for the discos were put in place so that they can make a change in the fortunes of the discos. Limited supplies to the discos from the national grid would limit the revenues of the discos.

source: http://www.vanguardngr.com/2014/01/understanding-electricity-tariffs-paid-consumers/
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by lwise(m): 3:07pm On Jan 08, 2014
My question is ,what is the fixed charge meant for,so if I dont use electricity at all for a month,I must pay a fixed charge.Haba,this is stealing by trick.
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by Coldblooded(m): 3:13pm On Jan 08, 2014
Thanks for this epiphany cheesy

But ma question now is "why the yearly increase in service charge ?" "Was it initiated to achieve any particular purpose?"

I watched when Prof Nebo was defending dis current N750 charge on TV, he didn't state any clear reasons for ma own understanding, he keeps reiterating d importance of it n dat dey can't shelve d idea either.
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by Polio: 3:25pm On Jan 08, 2014
To my knowledge and coming from my experience working in the supply and distribution streams of various organisations in the UK energy sector, the “fixed price” or "fixed charge" energy tariff means that your unit rates stay at one price for the duration of the plan you choose or is on offer. This can range from one to three years.

Fixed price does not mean that you pay the same regardless of your energy usage.

The biggest draw of fixed price/charge plans is that you’re protected if your energy supplier raises its prices — but fixed price energy can also be more expensive than the cheapest energy tariffs, and sometimes includes a cancellation fee.

I am not sure how things will work in Nigeria, i expect issues that will probably smoothen out over time if they stakeholders are keen on success stories on all fronts.
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by najoke: 3:27pm On Jan 08, 2014
lwise: My question is ,what is the fixed charge meant for,so if I dont use electricity at all for a month,I must pay a fixed charge.Haba,this is stealing by trick.
^
Perfect question
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by asala1: 3:44pm On Jan 08, 2014
Polio: To my knowledge and coming from my experience working in the supply and distribution streams of various organisations in the UK energy sector, the “fixed price” or "fixed charge" energy tariff means that your unit rates stay at one price for the duration of the plan you choose or is on offer. This can range from one to three years.

Fixed price does not mean that you pay the same regardless of your energy usage.

The biggest draw of fixed price/charge plans is that you’re protected if your energy supplier raises its prices — but fixed price energy can also be more expensive than the cheapest energy tariffs, and sometimes includes a cancellation fee.

I am not sure how things will work in Nigeria, i expect issues that will probably smoothen out over time if they stakeholders are keen on success stories on all fronts.

Here in Nigeria, we pay fixed charges for meter maintenance regardless of your energy usage. You have to pay the cumulative fixed changes even if you don't use electricity for 1 year. This is fraud!
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by Polio: 3:52pm On Jan 08, 2014
asala1:

Here in Nigeria, we pay fixed charges for meter maintenance regardless of your energy usage. You have to pay the cumulative fixed changes even if you don't use electricity for 1 year. This is fraud!

Whaaaat?! Insane shocked
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by Swiftboy(m): 4:32pm On Jan 08, 2014
If this disco no fit make us dance in the light...we must ask the government to stop them in their tracks! Which one we dey now?monkey dey work,baboon dey chop! #nonesense angry
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by gerald09(m): 2:17am On Jan 09, 2014
lwise: My question is ,what is the fixed charge meant for,so if I dont use electricity at all for a month,I must pay a fixed charge.Haba,this is stealing by trick.
I agree wif u but dis is private business, "business" being d keyword n for any business to be successful it needs to make profit. With d amount of money spent by these disco to buy into dis business dey will have to make back d money and fast in other to stabilise in d industry during dis time consumers bear most of dis burden but after stabilisation den comes competition by the FG helping to encourage competition. The other option we have is allowing d FG handle electricity, Oops! we already did n we kn d consequences. The communication industry is an example btw the tym cell fone became popular n nw u will notice dat prices have changed n competition is improving.
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by JNdupu: 3:18am On Jan 09, 2014
lwise: My question is ,what is the fixed charge meant for,so if I dont use electricity at all for a month,I must pay a fixed charge.Haba,this is stealing by trick.

The fixed charge refers to the portion of the tariff which you must pay regardless of whether you use the energy. The energy charge is the cost of the actual energy you consume.

This is normal in other climes (in the UK, all utilities are now moving to this tariff breakdown - the fixed charge is called the 'Standing Charge' and levied on a daily basis)

The principle behind this is that significant investments have to be made to construct the infrastructure that delivers the electricity to you regardless of whether you actually take it. The Energy charge covers the costs that actually depend on the amount of energy produced such as fuel and other variable costs.

Like I said, it is a normal tariff structure but paying the Fixed charge comes with an expectation you have access to the Energy always, whether you take it or not.

The expected problem in Nigeria is where there is no service delivery (ie, dem take light) and the Fixed Charge is still levied. The normal practice then is for the Fixed Charge to be refunded for those days where there is no Service delivery - which is why the UK Standing charge is stated on a daily basis so this calculation is easily made.

With a strong Regulator, you can go further and get compensation if there is any negative effect of the service unavailability but you are usually referred to your insurance (household or business interruption) first. The Nigerian electricity industry is fledgling and not yet at that level of promised service delivery but the expectation is that the industry becomes more robust as private players settle down and make the necessary efficiencies and the overall industry revenue pool continues to grow.


Cold blooded: But ma question now is "why the yearly increase in service charge ?" "Was it initiated to achieve any particular purpose?"

In my experience, those levels of Fixed Charges in the early years do not sufficiently cover the actual requirements of the industry so there is still significant Government subsidy involved. The yearly increase approaches the true cost of the service as the subsidies are withdrawn, and also assuming the industry continues to improve such that there is sufficient revenue for it to be self-sustaining.
Re: Understanding Electricity Tariffs Paid By Consumers In Nigeria by Coldblooded(m): 6:10pm On Jan 09, 2014
^^^
@ JNdupu

Thanks cheesy

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