Review of electricity pricing rule not automatic tariff increase – NERC

The Nigerian Electricity Regulatory Commission (NERC) has said a review of the electricity pricing methodology called the Multi-Year Tariff Order does not automatically translate to tariff increase.

The commission had adopted the Multi-Year Tariff Order (MYTO) Methodology in setting out the basis and procedures for determination of licensees’ revenue requirements and review of electricity tariffs in Nigeria. The Electric Power Sector Reform Act (EPSRA) directs this to be done twice every year.

“We wish to clarify that such reviews do not automatically translate to an increase in tariffs,” NERC said in a regulatory note.

The regulator said that where the impact of improved efficiency in operating parameters for individual licensees exceeds the impact of changes in macroeconomic parameters, end-user tariff may be reduced as exhibited in some tariff classes under MYTO2022.

The regulator said the adoption of MYTO methodology in setting out the basis and procedures for determination of licensees’ revenue requirements and review of electricity tariffs in Nigeria was pursuant to the provisions of the Electric Power Sector Reform Act (EPSRA).

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“This notice is issued to inform the general public and industry stakeholders of the Commission’s intention to commence the processes for the July 2022 Minor Review of MYTO – 2022 to consider changes in relevant macroeconomic indices, generation capacity, and capital expenditure (CAPEX) required for evacuation and distribution of the available generation capacity in compliance with extant rules.”

According to the statement, the methodology provides minor reviews, major reviews, and extraordinary reviews.

“In instances where industry parameters have changed significantly from those used in the operating tariffs to such an extent that a review is required urgently to maintain the viability of the electricity industry,” the statement read. “The methodology provides for Minor Reviews (every 6 months), Major Reviews (every 5 years), and Extraordinary Reviews.”

NERC has written the note to provide the clarification based on the widespread angst that greets every announcement of MYTO reviews with the public afraid tariffs will go up even as services continue to deteriorate.