NERC bars states :  You can’t slash electricity prices

The Nigerian Electricity Regulatory Commission (NERC) has issued a stern warning to state electricity regulatory bodies, declaring that no state has the authority to alter the wholesale tariff of electricity distributed through the national grid.

This directive follows the controversial action by the Enugu State Electricity Regulatory Commission (EERC) to cut the electricity tariff for Band A customers within the state to N160.4/kWh, a move that has raised serious alarm within Nigeria’s electricity market

NERC, in a detailed public notice issued  at the weekend, stated unequivocally that states must incorporate the full wholesale cost of grid-supplied electricity into their tariffs without deviation, unless backed by a clear policy intervention or subsidy. “They must holistically incorporate the wholesale costs of grid supply to their states without any qualification or deviation in their design of tariffs… or be prepared to make a policy intervention by way of a subsidy,” the statement said.

The Commission emphasised that the national grid and power plants operating under federal licences are outside the regulatory control of state commissions. The EERC tariff reduction, NERC warned, could distort market stability and financing obligations within the Nigerian Electricity Supply Industry (NESI).

Concerns were particularly raised about the NGN66.85/kWh gap created by slashing the average generation tariff from NGN112.60 to NGN45.75, suggesting an unbudgeted subsidy assumption that is unsupported by any federal or state-backed fiscal policy.

Citing Section 34(1) of the Electricity Act, NERC noted its legal responsibility to preserve efficient market structures and ensure full cost recovery in the sector, a role it shares with sub-national regulators like EERC. “Neither NERC nor EERC… would take decisions that expose the national grid and wholesale electricity market to a financial crisis,” the Commission stated.

NERC confirmed that it is currently engaging EERC to resolve the matter and ensure a uniform understanding of the legal and financial implications of tampering with national electricity pricing mechanisms.

The Commission reassured stakeholders of its unwavering commitment to uphold the integrity of the electricity market and recover full operational costs as stipulated under federal law.