NERC (Nigeria’s electricity regulator) has released new rules about how electricity prices will be changed, as people are concerned about potential price increases.
The head of NERC, Sanusi Garba, explained that according to the 2023 Electricity Act, they must make sure electricity companies can cover their reasonable costs, make enough money to keep operating and earn a fair profit on their investments.
NERC uses something called the “Multi-Year Tariff Order” to set electricity prices. They do a major review of prices every 5 years. One year before any big price change, they notify electricity companies, who then have 120 days to submit paperwork showing why they need price changes.
When requesting price changes, companies must provide their financial records, plans, and proof they talked to their customers about the changes.
NERC then reviews these requests through a careful process. First, they study the paperwork, which takes up to 90 days. Then they publish their findings and give the public 21 days to comment. After that, they hold a public hearing. Within 30 days after the hearing, they make a final decision.
For smaller, more frequent changes, NERC considers several factors such as fuel costs, inflation rates in Nigeria and the US, exchange rates, and how much electricity is being generated.
The President’s energy advisor, Olu Verheijen, has mentioned that prices will be reviewed soon.
“Today, the Federal Government spends over N200bn per month on electricity subsidies, but much of this support benefits the wealthiest 25 per cent of Nigerians rather than those who truly need assistance. To address this, the Federal Government is working towards a targeted subsidy system to ensure that low-income households receive the most support. This approach will make electricity more affordable and accessible for millions of hardworking families,” she stated.
