Power Firms Propose 49% Increase In Tariffs

 

Electricity distribution companies in the country have submitted various proposals to the Nigerian Electricity Regulatory Commission to increase tariffs by an average of 49.4 per cent.

They, however, agreed to reduce the amount paid as fixed charge by electricity consumers across the country.

According to NERC, the distribution companies have also adopted different measures to carry out the reduction of the fixed charge.

NERC on Tuesday stated that it would critically review the submissions before approving the rates proposed by the power firms.

It further stated that the rates so approved might be released by the end of this month.

A copy of the proposed tariff by the power firms, which was obtained by our correspondent in Abuja, showed that the average percentage increase in tariff as presented by the 10 other Discos was 49.4 per cent.

The Abuja, Benin, Enugu Jos and Ibadan power distribution firms proposed 48 per cent, 61 per cent, 60 per cent, 63 per cent and 56 per cent increase in tariffs for R1 customers respectively.

Similarly, the Ikeja, Kano, Port Harcourt and Yola Discos proposed 32 per cent, 40 per cent, 46 per cent and 83 per cent increase in electricity tariff in their submissions to NERC, while the Eko Disco requested the least increase in tariff at five per cent for residential R1 customers.

There were also different percentage increases in the various tariff proposals by the Discos for other classes of customers as contained in the document obtained by our correspondent.

The Senior Manager, Market Competition and Rates Division, NERC, Mr. Abba Terab, while making a presentation on the tariff setting process during a public consultation on extraordinary tariff review applications, stated that the Discos had contacted the regulator with proposals to reduce the power fixed charges.

“The Discos have proposed to cut their fixed charges. Some are proposing to do it on an annual basis and some are proposing a marginal cut,” he said.

Ikeja Electric had recently announced that it would reduce by 50 per cent the monthly fixed charge in the electricity bills sent to customers as soon as it got NERC’s approval.

The Chief Executive Officer, Abuja Electricity Distribution Company, Mr. Neil Croucher, had told our correspondent that his firm would reduce the fixed charge component in consumers’ bills by a fraction every year for 10 years.

Speaking also on why the fixed charges must be reduced, NERC’s Commissioner for Market Competition and Rates, Mr. Patrick Umeh, said the commission asked the Discos to cut the charges because it was unfair for the power firms to use them as a means of generating revenue.

Umeh added, “Rather, the tariff should be used for this purpose.

“Customers should pay for what they use and not pay for something they don’t get. The Discos’ fixed charges have to reflect the level of service they provide the customer. So, when that is done, the customer can now decide how he uses the electricity because that is what he’s going to be billed for.”

Umeh stated that the Discos submitted their proposed electricity tariffs after consultations with their various customers.

The Chairman, NERC, Dr. Sam Amadi, told journalists on the sidelines of the event that before any tariff would be approved, the Discos must fulfil certain specified terms and conditions.

He stated that the approved tariffs might get to the Discos by the end of this month, adding that the consequence of non-compliance with agreed terms would be severe once the proposed tariffs were approved.