The Nigerian Electricity Regulatory Commission (NERC) has reaffirmed that state governments do not have authority over the national grid or power stations established under federal law or regulated by NERC licenses. This statement follows recent controversy over Enugu Electricity Regulatory Commission’s (EERC) decision to reduce the Band A electricity tariff from N209/kWh to N160/kWh.
In a notice released Thursday, NERC warned that states must reflect the full wholesale costs of power supply when setting tariffs or be prepared to subsidize any shortfalls themselves. While states may regulate intrastate electricity markets they fully control, including setting tariffs for customers within their jurisdiction, they cannot dictate tariffs for power imported from the national grid.
NERC emphasized the risk of financial instability to the national power market if states ignore wholesale generation and transmission costs. It stressed its constitutional mandate to protect the financial health of the national electricity supply industry (NESI) and avoid exposing the system to crises through unilateral tariff cuts.
Specifically addressing the EERC’s tariff cut, NERC highlighted that the Band A tariff reduction was based on a significant, largely unbacked subsidy assumption, with the generation tariff cut from N112.60/kWh to N45.75/kWh a difference of N66.85/kWh. This gap raises concerns about how the power sector’s financing obligations, including legacy debts, will be met.
In response, power generation companies and distributors have urged states to wait until they start generating and transmitting electricity before attempting to set tariffs. The Association of Nigerian Electricity Distributors (ANED) CEO, Sunday Oduntan, warned that a tariff as low as N160/kWh cannot sustain a 20-hour power supply. He also noted growing consumer resistance to electricity bills following Enugu’s tariff cut, warning this could destabilize the fragile sector.
Meanwhile, the EERC has defended its decision, asserting that it did not alter national generation costs but based its tariff review on MainPower’s cost structure. According to EERC’s Commissioner for Electricity Market Operations, Reuben Okoye, the commission aims to develop a transparent, accountable, and sustainable sub-national electricity market that serves the people of Enugu efficiently.
