Following an application for tariff increase filed by the electricity distribution companies (DisCos), the Nigerian Electricity Regulatory Commission (NERC) has said it will conduct a rate case hearing.
It said the move was in line with its rule-making process and in the exercise of the powers conferred by the Electricity Act.
The regulator, in a notice of application, said the request for rate review is premised on the need to incorporate changes in macroeconomic parameters and other factors affecting the quality of service, operations and sustainability of the companies.
“Pursuant to Section 116 (1) and 2(a&b) of the Electricity Act 2023 and other extant rules, the 11 successor electricity distribution companies (DisCos) have filed an application for rate review with the Nigerian Electricity Regulatory Commission (NERC or the Commission),” the notice read.
In view of this, the commission called for public comments on the review applications even as it advised interested stakeholders to review and take into consideration the excerpts of the rate review applications filed with the commission by the respective licensees.
It said the “request to participate shall include an explanation of the person’s interest in the proceeding and how the party would be affected by the outcome of the application, a description of the party’s concerns, observations comments and/or objections to the application.”
Meanwhile a copy of the Abuja Electricity Distribution Company’s (AEDC) application with reference: AEDC/MD&CEO/CFO/03/2023 obtained by the Nigerian Tribune based its call for review on Operating Expenses (OPEX), Return on Investment (ROI), exchange rate, inflation and other considerations.
The DisCo, in the application signed by its Managing Director, Adeoye Fadeyibi, said it had on several occasions expressed concerns over the inadequacy of its allocated OPEX and how the cost recognised does not align with its actual OPEX requirement.
“This has continued to affect the performance of the business as the monthly allowed OPEX does not cover AEDC’s operational needs such as repairs, procurement of fast-moving materials for fault clearing, fueling vehicles for revenue protection activities, payment of payroll and statutory deductions, etc,” it said.
It said the current economic indices such as inflationary pressure, the removal of subsidy on Premium Motor Spirit, recent floating of the foreign exchange rate and its resultant increase in the general price level, continue to weigh down on the company’s performance.
The DisCo stressed that, “Further to the above, the business requires adequate funds to carry out its operations as it transitions into a technology-driven utility because the current situation where the company still predominantly carries out operational activities manually, such as the detection of energy theft by monitoring meters from house to house, is no longer sustainable.”
The AEDC, in its consideration plea, proposed a rebasing of the ATC&C loss target to 35 percent from the initial 19.27 percent commitment in its Performance Improvement Plan (PIP).
It said the 35 percent proposal is more reflective of its current reality adding that the adjustment will enable the business to achieve its objectives and meet all regulatory KPIs, including loss reduction.
Also, the DisCo asked the commission to extend the Performance Improvement Plan (PIP) deployment timeline to 2027 as projects that will significantly reduce losses are already underway.
The company said it was only assured of the immediate deployment of projects totaling N11.7 billion funded by CBN’s NEMSF 2 facility, out of which only N3.4 billion has so far been received.
“To implement the rest of the projects amounting to N63.3 billion, AEDC is awaiting the disbursement of other expected facilities, such as World Bank’s DISREP and AFDB funds. The proposed timeline is crucial to accommodate the procurement process after the disbursement of these facilities,” it added.