FG Cuts Electricity Tariff By 50%

Following series of complaints and threats by the manufacturing sector to either retrench workers or shut down their businesses, the Nigerian Electricity Regulatory Commission (NERC) yesterday said it has reduced electricity tariff by 50 per cent for some Distribution Companies (DISCOs) by removing the collection loss component of the Multi Year Tariff Order (MYTO) 2.1.

NERC said the added Aggregate Technical, Commercial and Collection (ATC&C) losses to the reviewed tariff implemented on January 1, 2015, after conducting a fact-finding tour of the Discos was responsible for the skyrocketed tariff.

Chairman of NERC, Dr Sam Amadi, said the added component was intended to ensure a cost reflective tariff by passing the bulk to consumers who pay their bills to cover for losses incurred from non-paying consumers.

But in a statement issued yesterday, the Commission which reversed itself on the policy, maintained that the failure of Discos to collect all their revenue should not be a burden passed unto the customers who pay their bills, hence it has set the collection losses component of the tariff at “zero per cent” adding that “it is clear that removing the collection losses will lead to lower tariffs for consumers.”

He said NERC “has therefore reviewed the basis of the MYTO 2.1 assumptions and has determined that it is inappropriate to transfer to consumers, collection losses that are controllable by Discos. It is the responsibility of the Discos to collect their revenue from their customers. Failure to do so should not be a penalty to customers who pay their bills.”

While increment in residential tariff following the revised MYTO 2.1 is pending till June 2015, the total removal of the collection loss however, applies to all consumer categories including the industrial and commercial consumers who have been so affected.

“This new order now amends the MYTO 2.1 and has reduced the tariff to be paid by all class of consumers. In the review MYTO 2.1, the Commission followed due process and the regulatory principles,” Amadi declared.

According to him, the Discos through a directive issued on March 9, have been ordered to follow the new rule of zero losses collection losses in the tariff, stating that “the removal of collection losses from customer tariff has reduced tariff by more than 50 per cent in some places.”

The Manufacturers Association of Nigeria (MAN), small and medium scale entrepreneurs and other commercial consumers had since the approval of MYTRO 2.1 which commenced on January 1, 2015, protested the skyrocketed tariff saying it was killing their businesses. (Leadership)