Enugu State’s decision to slash the Band A rate from N209 per kilowatt-hour (kWh) to N160/kWh fully aligned with the provisions of the Electricity Act 2023, the Forum of Commissioners for Power and Energy in Nigeria (FOCPEN) has stated.

In a press release dated July 23, the Forum stated that the action also aligned with the Constitution of the Federal Republic of Nigeria, and the Enugu State Electricity Laws and Regulations.

The release read: “FOCPEN today issued a statement to clarify recent developments in the Enugu State electricity market and to reassure investors and stakeholders about the direction of electricity sector reforms across Nigerian States.

“FOCPEN wishes to acknowledge and clarify the recent decision by the Enugu State Electricity Regulatory Commission (EERC) to review and adjust electricity tariffs within its jurisdiction.

“It is crucial to understand that Enugu State’s actions are fully aligned with the provisions of the Constitution of the Federal Republic of Nigeria, the Electricity Act 2023, and Enugu State electricity laws and regulations.”

According to the Forum, these legal frameworks empower States to regulate their intra-state electricity markets, including determining and implementing electricity tariffs within their jurisdiction, which are fair to electricity consumers and sufficient to allow licensees to recover their operating expenses and investments.

“FOCPEN wishes to also clarify that the EERC’s tariff order followed a comprehensive and meticulous review process that involved a thorough examination of the capital expenditure (Capex) and operational expenditure (OpEx) assumptions of MainPower Electricity Distribution Company, the State electricity distribution company.

“This rigorous assessment was conducted using data and information provided by the distribution company itself. EERC also carried out a rigorous assessment of MainPower’s existing customer tariff classification and regulatory asset base.

“One outcome of its rigorous assessment revealed that EERC had lifeline customers paying N4.00/kwh on Band A Feeders, including a former two time Military Administrator and former Chief of Naval Staff,” it read, “The EERC, acting within the ambit of its regulatory provisions, has set tariffs appropriately based on these findings, aiming for a cost-reflective and fair market for consumers and operators alike.”

In addition, FOCPEN emphasised that while Enugu State has, based on its specific market conditions and regulatory findings, adjusted its Band A tariffs downwards, this does not dictate a uniform approach for other States.

“For instance, several SERCs (e.g. Ekiti State, Ondo State, etc.), have issued tariff orders maintaining the present MYTO tariffs. Without any equivocation, each State Electricity Regulator is uniquely positioned within 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 peculiar electricity market dynamics, licensee cost structures, consumer needs and regulatory assessments.

“Furthermore, FOCPEN wishes to unequivocally assure investors in the Nigerian Electricity Supply Industry (NESI) that States are not seeking to arbitrarily downgrade tariffs, nor 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 State, are collectively committed towards fostering financially viable and sustainable electricity sectors where electricity tariffs accurately reflect the cost of service delivery, thereby encouraging investment and efficiency,” it stated.

The Forum further clarified that State electricity regulators, including EERC, regulate the intra-state distribution segment not the wholesale electricity market.

“Therefore, the tariffs for wholesale generation and transmission services, which fall under the purview of the Nigerian Electricity Regulatory Commission (NERC), remain secure and unaffected by Enugu State’s regulatory actions.

“The fear among GenCos that Enugu State’s tariff review will negatively impact their revenue streams is unfounded, as Enugu’s regulatory framework does not extend to the wholesale market where GenCos operate. The GenCo tariff, as approved by NERC, was duly factored into the EERC’s calculations,” the release read. (BusinessDay)