The Nigerian Electricity Regulatory Commission (NERC) has instituted a new policy requiring electricity distribution companies (DisCos) to downgrade Band A feeders that fail to provide at least 20 hours of power daily for a week straight.
This directive is part of the Service Delivery Commitments under the Multi-Year Tariff Order (MYTO) 2024, effective from April 3, 2024.
DisCos must now publicly explain any two-day service lapse on their websites by 10 am the following day and inform customers about service restoration timelines.
A feeder’s failure to meet the Band A service level for seven consecutive days will trigger an automatic downgrade to match the actual level of service provided.
Additionally, each DisCo is required to establish a rapid response team to ensure the delivery of the committed service hours, starting with Band A feeders.
This follows NERC’s announcement of a substantial tariff increase for Band A customers, from approximately N66 to N225 per kilowatt-hour, marking a 240% rise.
The increase will only impact customers receiving over 20 hours of power supply.
The MYTO 2024 Supplementary Order reflects the new tariff adjustments based on economic factors such as a 12% inflation rate increase, a 59% exchange rate surge, a 63% rise in generation costs, a 34% hike in transmission and admin costs, and an 11% increase in wholesale gas prices.
While introducing a new tariff model, NERC emphasizes customer protection and anticipates a N1.14 trillion reduction in subsidies for the fiscal year 2024, aligning with the federal government’s shift towards a more targeted subsidy approach.
This strategy aims to cushion the effects of macroeconomic changes while encouraging investment in the Nigerian Electricity Supply Industry (NESI) to enhance service efficiency.
The tariff determination process involves comprehensive reviews to balance customer protection with sufficient revenue for investors to support ongoing service improvements.
