NPC UKRENERGO’s Post

In January 2024, the Federal electricity sector regulator, the Nigerian Electricity Regulatory Commission (the Commission or NERC) committed to reviewing electricity tariffs once every month following changes in macroeconomic conditions in the country which impact end-use electricity tariffs in Nigeria vide the Multi-Year Tariff Order 2024 (MYTO 2024). In the past few weeks, and indeed since the beginning of the year, there has been several regulatory decisions from NERC, signaling increased competition in the retail market. Paramount among these was the complete liberalization of the tariffs paid by Band A customers in the Federal electricity market. On 28 March 2024 (effective 3 April 2024) and 3 May 2024 (effective 6 May 2024), NERC followed its commitment towards reviewing end-use tariff due to changes in variables in microeconomic conditions in end-use tariffs by issuing the April 2024 Supplementary Order to the Multi-Year Tariff Order - 2024 (April 2024 Supplementary Order). This was followed by the May 2024 Supplementary Order to the Multi-Year Tariff Order - 2024 (May 2024 Supplementary Order). Together, (the Regulatory Orders).  In this newsletter we review the Regulatory Orders noting the likely impact in the Nigerian Electricity Supply Industry (NESI). To read this newsletter, please click this link https://lnkd.in/dFGFxc3s ________________________________________ #OlaniwunAjayi #ElectricityTariff #NERC #MultiYearTariff2024 #ElectricityTariffIncrease #PowerSector

NERC imposes a N200 million fine on AEDC for increasing tariffs for all customers. The Abuja Electricity Distribution Company Plc has implemented the new power tariff of N225/kWh across all customer bands within its franchise areas, in defiance of the directive stipulating that only customers on Band A should be subjected to the new rate. As a result, AEDC has been fined N200 million by the Nigerian Electricity Regulatory Commission for contravening the commission’s Supplementary Order on the April 2024 Multi-Year Tariff Order. This move has stirred opposition from manufacturers and organized labor against the 240% tariff hike affecting approximately 1.9 million electricity consumers in Nigeria. The government's decision to withdraw subsidies on electricity for Band A customers, who represent about 15% of the total 12.82 million power users nationwide, has intensified public discontent. The tariff adjustment, announced during a press briefing in Abuja by NERC, raises the rate from N68/kWh to N225/kWh, effective April 3, 2024, exclusively impacting Band A consumers. Band A consumers are those receiving up to 20 hours of daily electricity supply and previously paying N68/kWh. However, concerns arise regarding the accuracy of customer categorization, as evidenced by discrepancies in electricity token purchases and unit allocations experienced by customers like Mr. Yakubu. NERC, in its response, emphasized its commitment to consumer rights protection and equitable practices within the electricity sector, urging consumers to report any similar incidents for appropriate action.

An excellent post on why simply increasing tariffs does not solve the mess that is our power sector. I am someone who has always thought that our tariffs need to go up but that by itself is no silver bullet. The other parts have to come together to make it worth the increased cost. This is holding out hope that NERC as the industry regulator will do the needful in ensuring that DISCOs increase their efficiency and reduce their ATC&C losses and the Ministry of Power also does its part in relation to policies for improving the sector.

Did you see National Grid ESO's summer update of forecast Transmission Network Use of System (#TNUoS) tariffs to apply for 2025/26 last month? Both the forecast half-hourly (HH) and non half-hourly (NHH) average tariffs have fallen. The ESO reports that the average HH gross tariff forecast has reduced £1.13/kW to £6.64/kW and the average NHH tariff is forecast to dip 0.07p/kWh to 0.30p/kWh. 📉 While the forecast tariffs have decreased slightly, they remain significantly higher than tariffs in 2024-25. 📈 👉 The average tariff is expected to increase by 30.4% based on the latest forecast. This is 2.2 percentage points lower than the average 32.6% expected in the April forecast. Explore our full analysis in our latest Intelligence article: https://lnkd.in/d4ketJgP

Transmission Network Use of System (#TNUoS) charges are forecast to rise over 30% from April 2025. This graph summarises the total TNUoS costs and year-on-year movements in TNUoS tariff for a typical Low-Voltage Site Specific Residual Band 2 customer (LVHH RB2). In the recent Five Year View of TNUoS charges, National Grid ESO predicted the tariffs would increase as follows... 👆 32% (£29.76/site/annum) for the average non-locational banded tariffs - this is skewed by the number of domestic customers on the system – the average rise for all business consumers is 33% and the £/site/annum figure varies 👆 19% (£1.26/kW) for the average locational half-hourly (HH) tariff 👆 21% (£0.06p/kWh) for the average non half-hourly (NHH) locational tariff The increase to the non-locational banded tariffs is due to a forecasted £1bn rise to the transmission demand residual revenues. This in turn is driven by greater TNUoS revenues to be recovered in the year. An increase in forecast zonal locational revenues is driving HH and NHH charges higher on average. Customers in the West Midlands and South Wales will see slightly lower locational HH charges based on the forecasts but still face greater TNUoS charges overall. Currently, the ESO forecasts TNUoS tariffs will increase much more slowly between 2025/26 and 2029/30, but several uncertainties exist around the longer-term forecasts.

Time of Use (ToU) tariffs are gaining popularity fast, but there’s still a lot of work to be done to help customers change their consumption behaviours in order to be in a position to take advantage of the tariffs. We take a closer look at what’s driving this trend and demonstrate our experience in helping utilities to encourage their customers to reduce their consumption during peak times. https://buff.ly/4cW1Sn4 #ClimateCrisis #CustomerEngagement #CustomerService

ELECTRICITY TARIFF INCREMENT BY THE NIGERIAN GOVERNMENT - Pt:1 The recent increment in electricity tariffs by the Nigerian government has been a topic of much discussion. The Nigerian Electricity Regulatory Commission (NERC) has defended the decision, stating that the increase will help reduce grid collapses and enhance the overall electricity supply. The tariff hike specifically targets premium customers, with an over 230% increase for those customers who use the most power. This move is part of the government’s efforts to reduce subsidies and ease pressure on public finances.   The increase is significant, with tariffs for Band ‘A’ customers rising from N68 to N225 per kilowatt hour. This affects less than 15% of Nigeria’s 12 million electricity consumers, specifically those enjoying 20-hour power supply or more. The NERC has also implemented measures to prevent exploitative practices by distribution companies and has established a situation room to address customer complaints related to the tariff adjustment.   It’s important to note that this increase comes amidst a backdrop of rising inflation and exchange rates in Nigeria, as well as increased costs in generation, transmission, and gas-to-power prices. The decision has been met with mixed reactions, as it aims to improve the power sector’s performance while also impacting the cost of electricity for consumers.   The increase in electricity tariffs in Nigeria is expected to have several direct effects on consumers:   Higher utility bills: The most immediate impact on consumers would be higher electricity bills. With increased tariffs, consumers would have to pay more for the same amount of electricity usage. This could strain household budgets, especially for low and middle-income families.   Reduced disposable income: Increased electricity bills would leave consumers with less disposable income to spend on other goods and services. This could lead to reduced spending on non-essential items, impacting various sectors of the economy.   To be continued... Kaykay Briggs April 5, 2024.

National Grid ESO published its summer update of forecast Transmission Network Use of System (#TNUoS) tariffs to apply for 2025/26, on 31 July. Forecast tariff levels have seen an overall slight decrease since the initial forecast in April. 📉 In part, this is due to a 1.1% reduction in the amount of revenue to be recovered from demand users of the system. An updated site count forecast has driven some deviations from this average reduction. 👇 Both the half-hourly (HH) and non half-hourly (NHH) average tariffs have also fallen. The ESO reports that the average HH gross tariff forecast has reduced £1.13/kW to £6.64/kW and the average NHH tariff is forecast to dip 0.07p/kWh to 0.30p/kWh. However, there’s a significant amount of regional variation to these movements. 📍 Adding both the residual fixed charge and the HH tariff for a representative Low Voltage Site Specific (LVSS) Residual Band 2 customer (based on an average 22kW demand over the triad periods), the forecast tariff ranges between £2,548/year and £2,714/year. This compares to between £2,584/year and £2,840/year in the April forecast. While the forecast tariffs have decreased slightly, they remain significantly higher than tariffs in 2024-25. Taking the arithmetic average across regions, for a typical LVSS customer, the average tariff is expected to increase by 30.4% based on the latest forecast.. see figure below ⬇️ Want more Intelligence? Our Customers get it delivered straight to their inboxes. Check out the link in the comments for Daniel Starman's latest analysis 👇

NERC INCREASES ELECTRICITY TARIFFS The Nigerian power sector has seen its fair share of challenges this year, with the constant threats of tariff increases adding an intriguing dimension. In the latest development, the Nigerian Electricity Regulatory Commission (NERC) has announced a tariff hike, specifically targeting Band A customers who are entitled to a minimum of 20 hours of supply daily. As of yesterday evening, both the Abuja and Port Harcourt Distribution Companies have swiftly implemented the new tariff of N225/kWh for all Band A customers, including residential ones. With VAT included, approximately 15% of NESI customers will now be paying around N242/kWh. NERC has justified this adjustment based on economic metrics and assumptions. However, what's notable is the uniformity of the tariff across all DisCos. Typically, DisCos have different tariffs due to variations in their operating and capital expenditures. Thus, a uniform tariff seems somewhat inconsistent with the existing methodology. Moreover, this flat rate significantly exceeds the cost-reflective rate outlined in the January 2024 MYTO, which was intended to remain in effect for the next six months, contingent upon changes in economic metrics like forex, inflation, and gas prices. While it's true that these metrics have indeed risen, it's debatable whether they warrant a 210% tariff increase for only one consumer class. Despite NERC's assertion that Band A customers have been receiving the mandated 20 hours of supply, many consumers dispute this claim. NERC has committed to closely monitoring service delivery to Band A customers going forward through DisCos to ensure compliance. One can only hope that this will lead to increased reliability for these customers, if nothing else. This is particularly crucial because, with the removal of the fuel subsidy less than a year ago, Nigerians are still grappling with harsh economic realities, making this tariff hike an unwelcome development for many. NERC argues that this move will significantly reduce the government's 2024 electricity subsidy by N1.14 trillion, a substantial decrease from the initial estimate of N1.6 trillion in the January 2024 Multi-Year Tariff Order (MYTO). However, there are sure to be negative effects which we will dive into in our next post. This series focuses on the newly implemented tariffs.