NERC Transfers Regulatory Oversight To Enugu Electricity Commission In Landmark Electricity Market Shift

EXCERPT: Enugu has become the first state to have exclusive authority to determine electricity tariffs for residents.

In a move that will significantly alter the Nigerian Electricity Supply Industry (NESI), the Nigerian Electricity Regulatory Commission (NERC), on Monday, in an Order, kick-started the process of handing over its regulatory oversight power to the Enugu State Electricity Regulatory Commission (EERC) in compliance with the new Electricity Act, 2023.

In essence, when the process is completed, EERC will have the exclusive power to determine tariff for power consumers in the state, thus, becoming the first sub-national in the country to request the ceding of such oversight functions from NERC.

In the order marked: NERC/2024/039, the apex power regulatory body in the country announced that the kick-off date for the instrument to take effect would be May 1, this year.

The document was cited as, “The Order of Transfer of Regulatory Oversight of the Electricity Market in Enugu State from Nigerian Electricity Regulatory Commission (NERC) to the Enugu State Electricity Regulatory Commission (EERC).”

In the order jointly signed by NERC Chairman, Sanusi Garba, and Commissioner, Legal, Licensing and Compliance, Dafe Akpeneye, on April 22, 2024, the commission stated that it was adhering strictly to the new Electricity Act, which now empowered interested states to make such requests.

President Muhammadu Buhari had in March 2023 assented to the landmark law, which empowers states to licence, generate, transmit and distribute electricity. His successor, President Bola Tinubu, has also made at least two amendments to the law since he took over the reins of power in May 2023.

The electricity market in Nigeria was previously centralised, but the law now grants legislative autonomy to federating states in Nigeria by empowering the sub-national governments to legislate on the generation, transmission and distribution of electricity within each respective state.

Whereas the law was previously that, “A House of Assembly may make laws for the state with respect to generation, transmission, and distribution of electricity to areas not covered by a national grid system within that state,” it was recently amended to read, “A House of Assembly may make laws for the state with respect to generation, transmission, and distribution of electricity to areas within that state.”

However, the law mandates any state that intends to establish and regulate intrastate electricity markets to deliver a formal notification of its processes and request NERC to transfer regulatory authority over electricity operations in the state to the state regulator.

Based on this law, NERC stated that the government of Enugu State complied with the conditions precedent in the laws, duly notified it and requested for the transfer of regulatory oversight of the intrastate electricity market in the state.

NERC, in the announcement, directed the Enugu Electricity Distribution Company (EEDC) to incorporate a subsidiary (EEDC SubCo) to assume responsibilities for intrastate supply and distribution of electricity in Enugu State from EEDC.

It stressed that EEDC shall complete the incorporation of EEDC SubCo within 60 days from April 22, 2024 and the sub-company shall apply for and obtain a licence for the intrastate supply and distribution of electricity from EERC, among other directives.  All transfers envisaged by the order, the apex regulatory commission said, shall be completed by October 22, 2024.

NERC stated, “EEDC shall create an Asset Register of all its power infrastructure located within Enugu State; evaluate and apportion contractual obligations and liabilities attributable to EEDC’s operations of its subsidiary in Enugu State and identify all the applicable trading points for energy o take for the operations of EEDC SubCo in EnugU State.

“(It shall) Confirm the number of employees that are required to provide service to Enugu State as a standalone public Utility; and transfer the identified assets for operations in Enugu State, contractual obligations, liabilities and employees to EERC SUbCO.”

NERC pointed out that a transfer of regulatory oversight notification shall be issued by the commission to the companies in the register whose activities were limited within Enugu State informing the entities of the transfer/assumption of regulatory oversight for their activities by EERC.

All cross-border transactions involving the national grid, it said, shall be subject to the approval of the commission in accordance with the constitution and the Electricity Act.

NERC stated in the new order, “EERC shall have the exclusive responsibility of determining and adopting an end-user tariff methodology applicable within its area of regulatory oversight. Where EEDC SUbCO receives electricity from grid connected plants, the contracts and tariffs applicable for generation and transmission services shall be approved by the commission.

“The final end-user tariffs approved by EERC shall be the exclusive tariffs that apply in Enugu State and all tariff policy support for end-use customers in Enugu State shall be the responsibility of the Enugu State government.”

Emmanuel Addeh

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