₦airaland Forum

Commissioners of energy across the 36 states on Wednesday disclosed their readiness to meet with power distributors to negotiate electricity tariffs that are reflective and not burdensome on residents of the states.

This follows the recent cut in electricity tariff for Band A customers from N209/kWh to N160/kWh by the Enugu Electricity Regulatory Commission, and the resistance that greeted the development by both power generation and distribution companies.

However, the power distribution companies have kicked against any form of negotiations with states on power tariffs, stressing that the move by the state governments might kill the power sector if care is not taken.

The EERC, on its part, has continued to defend its position and is not ready to give in to the demands of power generators and distributors, as the states defended their decision to regulate the power sector in their various jurisdictions.

Recently, the Nigerian Electricity Regulatory Commission disclosed that seven states now control their electricity markets in accordance with the Electricity Act 2023. The states are Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi. Other states, including Lagos, Ogun, Niger, and Plateau, are expected to complete their transitions between now and September.

Speaking with The PUNCH on Wednesday, the Chairman, Forum of Commissioners of Power and Energy in Nigeria, who doubles as the Commissioner of Power and Renewable Energy for Cross River State, Prince Eka Williams, stated that though some states might have the wherewithal to subsidise the power supply of their residents, the aim of state governments was mainly to ensure adequate power supply in their states.

He insisted that the Electricity Act 2023 had empowered the states to regulate the sector in their domains, and resisted attempts to counter this development.

“Without any equivocation, each State Electricity Regulator is uniquely positioned to determine and implement appropriate electricity tariffs that are fair to customers and at the same time, catalyse investments within their electricity markets, depending on their perculiar electricity market dynamics, licensee cost structures, consumer needs, and regulatory assessments,” he stated.

Asked whether state governments were ready to bear the burden of electricity subsidies, as declared by the power minister following the slash in tariffs by Enugu state, Williams replied, “Well, it’s not something I want to unilaterally agree or disagree with. The power sector is currently being tested, and there’s a lot of experimentation going on. There’s no one-size-fits-all approach.

“What’s important is that all stakeholders sit at the table to discuss these issues, taking into account the unique circumstances of each state. States operate differently. So, any governor who feels inclined can say, ‘I’m ready to shoulder this responsibility.’

“I believe what the minister is suggesting is that states can and should have more input in shaping the electricity conversation. But it’s still an ongoing dialogue. It’s not something you can pin down as a definitive statement, it requires extensive consultation and engagement.”

Also, in a statement on Wednesday, the Forum of State Commissioners of Power and Energy said the claims by the power generation companies were unfounded, allaying fears that the decision of Enugu to reduce the tariff of Band A would negatively impact its revenue streams.

The forum, speaking on behalf of the 36 states, said it was ready to negotiate with the Discos operating in their states. However, power distributors told The PUNCH that they were not ready for any negotiation with the states, who they alleged were trying to sabotage the successes recorded in power generation lately.

Recall that states like Lagos, Ondo and Plateau have indicated their interest in slashing tariffs. But the Enugu power regulator insisted that there was no point retaining the Band A tariff at N209/kWh, defending its decision scheduled to take effect from August 1.


Speaking on behalf of the states, the forum Chairman, Williams, and Secretary, Omale Omale, noted that the Enugu government’s policy did not extend to the wholesale market where Gencos operate.

The forum explained that the downward reduction in electricity tariffs by the Enugu Electricity Regulatory Commission was duly aligned with the provisions of the Electricity Act 2023.

The forum also said the new tariff by the Enugu Electricity Regulatory Commission followed a comprehensive and meticulous review process of thorough examination of the capital and operational expenditures and assumptions of MainPower Electricity Distribution Company operating in the state.

“The Enugu Electricity Regulatory Commission carried out a rigorous assessment of MainPower’s existing customer tariffs classification and regulatory assets base of N4.00 kWh on Band A feeders. The EERC, acting within the ambit of its regulatory provisions, has set tariffs approximately based on its findings, aiming for a cost-reflective and fair market for consumers and operators alike,“ the statement read in parts.

While stating that Enugu State based its regulatory findings and specific market conditions on the downward tariff adjustment, the forum noted that this did not amount to other states applying the same approach.

“For instance, several states, Ekiti, Ondo states, and others have issued tariff orders maintaining the present MYTO tariffs,” it stated. FOCPEN assured investors and the Nigerian Electricity Supply Industry that states did not arbitrarily reduce tariffs or depend on unsustainable electricity subsidies by the Federal Government.

“On the contrary, states are resolute in their call for the removal of untargeted and opaque federal subsidies, advocating instead for the establishment of truly cost-reflective subnational and wholesale electricity markets. States, including Enugu, are sectors where electricity tariffs accurately reflect the cost of service delivery, thereby encouraging investment and efficiency,” the group added.

It noted that the tariff for wholesale generation and transmission services, which fall under the purview of the Nigerian Electricity Regulatory Commission, remains secure and unaffected.

In an interview with one of our correspondents, the Chief Executive Officer of the Association of Nigerian Electricity Distributors, Sunday Oduntan, said the association would not engage in any negotiation with the states. Oduntan argued that the states were trying to put Nigeria into darkness with the slash in tariffs, saying it is not sustainable.

“We are not negotiating with the states. What they are doing will destroy the market. If they continue like this, the power supply will drop again. Can’t you see that there’s an improvement in power supply these days? Everything will go back if this tariff cut continues in the states. These states just want to create a shortfall. If there’s no funds, there will be a crisis,” Oduntan warned.

Enugu defends position

Meanwhile, the EERC clarified that its recent tariff cut did not tamper with the prevailing cost of power generation in the country in any way. The commission maintained that, based on MainPower’s costs, there was no justification to keep the price of electricity for Band A at N209/kWh in the state.

In a statement by EERC’s Commissioner for Electricity Market Operations, Reuben Okoye, the agency maintained that although it inherited the current tariff regime, “the commission is focused on developing a sub-national electricity market that is transparent, accountable, reliable and sustainable and therefore will review utility costs of service to achieve its mandate to the people of Enugu.”

EERC further clarified, “The Order is for MainPower’s operation in Enugu State. It does not affect electricity services in other states, between states and across the country. The cost of delivering electricity from the national Grid to MainPower via EEDC has been accommodated in full. We did not tamper with that cost at all in our tariff determination, but rather adopted it.

“Our order ensures that MainPower recovers all its efficient costs and makes a reasonable return in its business of providing electricity services to citizens of Enugu State. Considerations and reconsiderations of the MainPower tariff application and data still present the same outcome that ensures full payment of invoices to all parties.”

On the justification for tariff reduction, EERC said that “having gone through its rigorous process, EERC has no rationale or justification to keep Band A at N209” in the state.

“EERC has not removed a kobo from the generation and transmission costs of delivering power to Enugu State, but rather included the exact costs to ensure complete payment of MainPower’s portion of the Nigerian Bulk Electricity Trading Plc invoices. Also, MainPower’s share of EEDC’s debts arising from CBN’s interventions in the NESI was included in the tariff.

“EERC and MainPower also reviewed all the relevant data/information provided by MainPower for its tariff determination to ensure accuracy,” it was stated.

The agency said it would be willing to entertain any evidence that showed that its calculations were wrong. “We are willing to entertain any evidence that shows that our methodology, analysis, computation, and output are wrong. The total focus on the reduction of Band A tariff by some commentators is rather unfair to the commission and to electricity consumers in Enugu State.

“It is important to say that with the ongoing migration of more customers to Band A, the general cost of delivering electricity is spread across larger customer numbers, which should also result in a reduced cost of service delivery,” EERC added.

Continuing, the commission noted that the emerging issue or question is: should customers in Enugu State be over-billed for electricity services, and if so, for whose benefit?

“The fact remains that Gencos will not get the over-recovery from any Subco until a cost-reflective tariff is adopted across the board in the country. So, their present concerns are misdirected. We stand ready to provide clarification as well as engage concerned stakeholders so as to provide assurances regarding the order.

“Again, for emphasis, let us be clear that this tariff Order is only applicable to Enugu State, as it was developed after considering the circumstances, information and data of MainPower in the state,” the statement said.

The commission, therefore, invited Gencos that are ready to operate with effective contracts based on a willing-buyer, willing-seller commercial arrangement to consider setting up power plants in Enugu State.

“We will consider and approve the PPA and tariff for them to do their business, as the PPA cost will be a natural pass-through in the tariff,” EERC concluded.

The Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, has lamented that the state’s effort to control electricity is being frustrated by electricity distribution companies in the state.

“You know we are battling with our Discos; they are not in agreement with anything we are doing, and the Discos are the ones behind this amendment bill that is in the Senate,” he said.

He explained that, unlike Enugu, the efforts to negotiate things are “increasingly difficult” but noted that Lagos would soon announce its tariff plan from next week.

Source: https://punchng.com/Tariff-battle-escalates-Discos-reject-review-talks-with-states

20k unit don't last up to two weeks.

NEPA, very wicked people

These discos and their stubbornness sha. Kaiiii

People are using 60% of their salary to buy Units that won't last up to 2weeks

This is crazy

States shouldn't be setting prices for Discos.

If they think they can run the show, states should have their own Gencos and Discos.

After all, Buhari and Balablue signed bills that empowered states to do that.

Discos and gencos the 2 of them are the real agent of darkness. Now the country don leave the light matter for them, we are now potting into solar everywhere 💡😁.

Should you say anything negative about tunubu, seun and his boys will ban you.

The platform is now pro tunubu

Anything about PHCN and subsidiaries are just like daylight robbery. Nigerians sees it and still allowing it

The states just want to extend to band A, what tinubu is doing for bands b-e...cheap power, that would make people happy, but in the long run ruin our power sector and keep us in darkness.

At the end, abuse me, call me names, but if you want 24 hour light it is only possible with a thoroughly deregulated power sector. Not one where the regulatory agency sets the prices for the discos and by extension the gencos.

Nigerians want a ferrari at the price of a bicycle.

FG is very inconsiderate. Why allowing us to suffer when state have said they want to subsidize power for his people.

adenigga:
Source: https://punchng.com/Tariff-battle-escalates-Discos-reject-review-talks-with-states

Let them continue to fight each other to the favour of the masses

adenigga:
Source: https://punchng.com/Tariff-battle-escalates-Discos-reject-review-talks-with-states

State Governments should create alternatives to national grid so that they can control the whole value chain. Discos are marketers and do not totally decide the price without the consideration of Gencos and Transcos that transmit the electricity.

Enugu is being impractical. Even the Power Plant they are soliciting from investors will not materialize if the private investors see an overbearing regulator. Besides, it takes several months to build a power plant. They should have had a transition plan and engage with all the stakeholders first while working on the alternatives to national grid.

The big elephant is the Gencos with their huge capital outlay and cost of gas. Enugu placed the cart before the horse and has given a leeway to the Discos to see them as inexperienced

Where is that nairalanda1?

Lol.

As much as I respect and value his/her opinions, this article subtly captures the fact that the true cost, without overheads, is actually N4kwh for Band A users.

I am sure Enugu Electricity Board calculated "well well" and realized that no matter how much you're paying staff and running other things like security, theft, bribery (which is a Nigerian thing) and co., there is no way the end point charge should be more than N160.

The margins are really crazy.

Everybody is calculating these people's profits as if they own the wires, poles and transformers and stations. All they did is lease and deliver services. That's why they are being labeled "rent-seekers".

What's wrong with Nigerians and this lack of understanding rudimentary business principles sef? Nobody on nairaland go business school at all at all ni?

Let the distribution companies ensure every subscribers are metered

Estimated billings is fraud

SmartPolician:
States shouldn't be setting prices for Discos.

If they think they can run the show, states should have their own Gencos and Discos.

After all, Buhari and Balablue signed bills that empowered states to do that.

EEDC can quit if they aren't going to make profit based on this. The electricity at 168kwh is still very very lucrative. Why making over 100% profit from band A. EEDC should distribute more meters and increase their band A territory to make more profit. This will give EEDC room to improve their services.

FreeStuffsNG:
State Governments should create alternatives to national grid so that they can control the whole value chain. Discos are marketers and do not totally decide the price without the consideration of Gencos and Transcos that transmit the electricity.

Enugu is being impractical. Even the Power Plant they are soliciting from investors will not materialize if the private investors see an overbearing regulator. Besides, it takes several months to build a power plant. They should have had a transition plan and engage with all the stakeholders first while working on the alternatives to national grid.

The big elephant is the Gencos with their huge capital outlay and cost of gas. Enugu placed the cart before the horse and has given a leeway to the Discos to see them as inexperienced

EEDC can quit na. They should save us the noise abeg. All Discos are thieves. They have stopped investing in transformers, cables and what have you. They are only interested in collecting receipts. Lol.

There is a limit to what alternative energy can do, except one is doing well. Having a small solar solution has given me a degree of relief.

caleboxylic:
EEDC can quit if they aren't going to make profit based on this. The electricity at 168kwh is still very very lucrative. Why making over 100% profit from band A. EEDC should distribute more meters and increase their band A territory to make more profit. This will give EEDC room to improve their services.

If EEDC quit, na you go do the business? 😂😂

You must think that having the capacity to run a regional power company na beans.

FYI, the FG isn't subsidizing Band A. That's why the tariff is the highest, but the government still subsidizes other bands because they don't enjoy steady power supply.

Meanwhile, state regulators should take a cue from NCC and stay out of a business they cannot run.

BTW, discos aren't making profits; they are only generating revenue. Profit is what you make when you deduct your running cost. Discos are owing Gencos billion of naira, and I keep wondering who will pay their bank debts when their licenses expire in the coming years.

However, I agree with you that expanding Band A footprint can potentially increase the revenue of EEDC, but that will largely depend on amount of power allotted to the South East zone.

Finally, I have consistently maintained that these discos should be further unbundled for proper monitoring and management. This business model isn't working.

caleboxylic:
EEDC can quit na. They should save us the noise abeg. All Discos are thieves. They have stopped investing in transformers, cables and what have you. They are only interested in collecting receipts. Lol.

It's Enugu State that should build its alternative to EEDC to break the monopoly. Anything outside that is a voyage in futility. Even Gencos and Transco are linked to Discos.

The Discos are not the only one in the value chain o. They are just the last mile so this fiat by Enugu State Government will not work unless it is the one to generate and transmit at that price

kalvoken:
Should you say anything negative about tunubu, seun and his boys will ban you.

The platform is now pro tunubu

If you don't have anything tangible to contribute to this important topic scroll on.

cenaman:
20k unit don't last up to two weeks.

NEPA, very wicked people

ur house must be small and u are not under bandA.we do 10k daily here.No be nepa na our politicians.

I want to appreciate the Enugu state government for taking the bull by the horns,we can't be paying for the darkness especially those that haven't got prepaid meter. The prepaid meter self supposed be given to customers free or at a very reduced price because I don't know who goes to petrol filling station with his or her own meter.

The SCAM is gradually falling apart.

You can only tell a lie for a period of time.

What is Band A? in a country where many people are still under estimated billing?

in a country where people are still doing one day OFF, two days ON.

in a country where people still have to contribute money to buy their street transformer.

If i am a governor the state will partner with an investor and build the infrastructure.....I will tell the discos to go to hell. States can provide electricity for their indigenes, Nigeria just like to make things look complicated but it is not hard.

Ibadan electricity distribution company is over charging their customers (IBEDC). They just increased their tariff two weeks ago. Imagine given me 50 unit for #5,000 and we only have light sometimes 12 hours a day. No light throughout Tuesday until lwednesday night. I called the district manager, he said they just put my area from band C to band B without our consent. This is not fair at all.

TheBizGenius:
Where is that nairalanda1?

Lol.

As much as I respect and value his/her opinions, this article subtly captures the fact that the true cost, without overheads, is actually N4kwh for Band A users.

I am sure Enugu Electricity Board calculated "well well" and realized that no matter how much you're paying staff and running other things like security, theft, bribery (which is a Nigerian thing) and co., there is no way the end point charge should be more than N160.

The margins are really crazy.

Everybody is calculating these people's profits as if they own the wires, poles and transformers and stations. All they did is lease and deliver services. That's why they are being labeled "rent-seekers".

What's wrong with Nigerians and this lack of understanding rudimentary business principles sef? Nobody on nairaland go business school at all at all ni?

That's the problem with you guys, you use abuse and condenscension when you have no argument left

No good power supply without deregulation. It's a fact, and your complaining about it does not change that fact.

Adieu.

Look at what the are saying,
That the .ove will kill power sector,
Just a street in Lagos can go as long as 80-200 buildings, if each building is paying just 10k,
It's roughly 1m or 2m, but some buildings pay as high as 20k per flat and some buildings have 6-10 flats, I didn't calculate per flat but per building
Now calculate 2-20 streets
Some local government area has more than 300-500 or more streets.
Do the maths and see that Phcn are making money and stealing and lying.
Even if 10% of each street owe, they are still making money

ceejay80s:
Look at what the are saying,
That the .ove will kill power sector,
Just a street in Lagos can go as long as 80-200 buildings, if each building is paying just 10k,
It's roughly 1m or 2m, but some buildings pay as high as 20k per flat and some buildings have 6-10 flats, I didn't calculate per flat but per building
Now calculate 2-20 streets
Some local government area has more than 300-500 or more streets.
Do the maths and see that Phcn are making money and stealing and lying.
Even if 10% of each street owe, they are still making money

God bless you.

The problem that I see with Nigeria is that the youths that makes up 70% of its populace are not trained.

There needs to be a school to teach basic legal studies for beginners and business studies for beginners, which are the 2 basics that are needed for youthful engagements and national growth.

Most people on this forum supporting or negating political policies are basically ignorant and make comments you would normally hear in bars.

Others can't read court judgements correctly and can not even ask a lawyer around them for correct interpretation of court documents posted here.

While concerning business, most just approach all issues as if big businesses operate like a container shop without overhead and staff management principles to deal with.

The average Nigerian youth has to become Remarkable and move from this "I dey hustle everyday", "Government don kill me finish" and "I wan buy one car to oppress for my street" mentality.

Or better still, if someone has another forum that has more intellectuals, please quote me so I can go there instead. I might be ranting because it's only nairaland I come to.

What is this rubbish about?

FG directed that electricity be managed by the states, why are these criminals called discos ranting?

Its high time the privatization be reversed because it is a monumental failure, the discos provide no real value, people are being forced to pay for services not rendered.

If you are in a band a which is supposed to enjoy 24 hours of supply but you get 10 and are still forced to pay for 24 hours that's is a fraud.

Electricity consumers need to wake up and demand for better service and accountability from dubious service providers, during the govt owned NEPA this was the case, with customers being credited for money paid for no supply.

These discos cant be collecting money for supplying darkness.

There has been no supply in my area for over a month now, yet bills keep coming, isn't that a fraud.

States should grant license to encourage people to generate and supply power with new distribution infrastructure, something the discos were supposed to o but refused to do. Stop enriching criminal oligarchs.

cenaman:
20k unit don't last up to two weeks.

NEPA, very wicked people

That’s a lie.

I am on band A

Before, I use 40k monthly, but not, I use 15k for 5 weeks.

Ibadan

nairalanda1:
The states just want to extend to band A, what tinubu is doing for bands b-e...cheap power, that would make people happy, but in the long run ruin our power sector and keep us in darkness.

At the end, abuse me, call me names, but if you want 24 hour light it is only possible with a thoroughly deregulated power sector. Not one where the regulatory agency sets the prices for the discos and by extension the gencos.

Nigerians want a ferrari at the price of a bicycle.

Always wanting what they can't pay for, very anyhow people