Will Electricity Bills Go Up?
NERC is set to review electricity tariffs as changes in the expenditure and operational environment of the DisCos over time have resulted in the need for tariffs that adequately reflect current market forces.
The Nigerian Electricity Regulatory Commission, NERC, says it will review electricity tariffs and shortfalls, in pursuit of the Power Sector Recovery Program, PSRP.
In a newly released Performance Improvement Plan guideline for electricity distribution companies, DisCos, the operators said the move is in pursuit of the Power Sector Recovery Program, PSRP.
The NERC explained that is implementing a more robust tariff review process aiming at improving the performance of the Nigerian Electricity Supply Industry, NESI, adding that the process will involve a review of the application of the capital expenditure allowances in the Multi-Year Tariff Order, MYTO model, for compliance with Performance Improvement Plans, PIPs, to be prepared by the Discos and approved by the Commission.
The implementation of the PIP is to be strictly monitored by the Commission.
The review will prioritise expenditure by electricity distribution companies and reflect changes in the operational environment that have occurred since the last tariff review.
It is noteworthy that one of the overarching objectives of the PSRP is the elimination of tariff shortfalls and the enforcement of market obligations, it said.
The PIP developed by DisCos will cover the period 2020-2024 tariff period but subject to the contractual provisions of the Performance Agreements executed between the core investors and the Bureau of Public Enterprises, BPE in respect of the allowances for capital and operating expenditure in the remaining term of the agreement.
Upon approval by the Commission, the PIP will form the basis of prioritising and monitoring the capital investment initiatives of the DisCos with revenue adjustment for non-implemented projects.
According to NERC, the approved PIPs will also be the basis for the defining Performance Standards/KPIs for the next five-year tariff period by the Commission, with emphasis on improvement in energy throughput and delivery by DisCos, reduction in aggregate technical/commercial losses and overall improvement in service delivery to customers.
Discos are also expected to set a fresh five-year plan for their respective companies and electricity consumers.
“The preparation of the PIP is an opportunity for DisCos to set out what they intend to deliver to consumers over the five-year tariff period as well as the associated costs, in line with the MYTO Methodology. The DisCo’s PIP is expected to draw from the vision of the Electric Power Sector Reform Act, existing NERC rules and regulations, and the Power Sector Recovery Programme, PSRP,” the document said.
Source: Sweet Crude Reports