NERC directs DisCos to hike electricity tariff by 50%

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Nigeria Electricity Regulatory Commission (NERC) has ordered  11  electricity Distribution Companies (DisCos) to hike their tariffs by an average of 50 per cent come April 1.

In its memo to the  commission, Ikeja Electric (IE) Plc said,  the directive was in place, in order  for them to meet the tariff shortfall funding targeted for 2020 by the government.

The Chief Executive Officer, Antony Youdeowei reacting to the order disclosed that directive on  the tariff increase is expected to raise the average tariffs from the current level of 27.30 N/kWh to 40.95 N/kWh.

The DisCo said, they have informed the commission that in line with the directive they  have designed the tariffs based on the MYTO tariff model contained in the document, Ikeja DisCo Tariff Model Jan 2020.

“In this application, we intend to create a new tariff class, called Bilateral; a class that is being created for customers that IE has a signed Power Purchase Agreement (PPA) with under a willing-buyer-willing seller arrangement.

In order to provide an efficient and reliable service to customers in this tariff class, cost-reflective tariffs are required to cover the cost of service delivery.

They said, there total bilateral energy procured is currently 200MW, however, bilateral sales in the application is only the portion of the bilateral energy that has been contracted with customers on a willing-buyer-willing seller arrangement.

The power firm said, that the expected MYTO 2020 and bilateral revenue requirement are collected sales (GWh) in MYTO is 3,955mw, and bilateral 161mw, total 2020 for 4,116mw.

According to IE, the collected energy sales based on the 50 per cent tariff increase in MYTO is 3,955GWh, while of the bilateral sales is 161GWh.

It also noted that the expected MYTO 2020 and bilateral revenue requirement, are N162billion and N8billion respectively, to give a total revenue requirement of N170billion.

The IE said that the “50 per cent tariff increase is expected to raise the average tariffs from the current level of 27.30 N/kWh to 40.95 N/kWh.”

The document added that “the addition of bilateral sales revenue requirement further increases the average tariffs to 41.31N/kWh. Over the next five years (2020-2024), we have assumed the bilateral revenue requirement forms part of the title allowed revenue,” they said.

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