The Power Struggle: States, Discos, and the Battle Over Electricity Tariffs in Nigeria
Nigeria’s power sector is embroiled in a contentious dispute over electricity tariff regulation. State governments, empowered by the newly amended Electricity Act of 2023, assert their right to regulate electricity markets within their boundaries. However, electricity distribution companies (Discos), represented by the Association of Nigerian Electricity Distributors (ANED), argue that while states can regulate their own generated power, they lack the authority to set prices for electricity transmitted from the national grid, a crucial distinction in this complex struggle.
The epicenter of this power struggle is Enugu State, where the Enugu Electricity Regulatory Commission (EERC) recently slashed electricity tariffs, leading to a 50% reduction in power supply from the Enugu Electricity Distribution Company (EEDC) to its subsidiary, MainPower, the Disco serving Enugu State. This action was prompted by EEDC’s assertion that implementing the lower tariffs would lead to unsustainable financial losses. The situation highlights the core disagreement: who has the ultimate authority to set prices for electricity distributed within a state but originating from the national grid.
The Nigerian Electricity Regulatory Commission (NERC), the national regulatory body, has stepped in to mediate this escalating conflict. NERC has summoned a stakeholder meeting involving state energy commissioners, Disco operators, and other key players in the Nigerian Electricity Supply Industry (NESI). This meeting aims to address the simmering tensions, clarify the regulatory landscape outlined in the amended Electricity Act, and seek common ground to ensure stable and affordable electricity supply across the nation.
The Discos maintain a firm stance, cautioning against what they view as state overreach in tariff regulation. They argue that setting prices below the cost of production, as seen in the Enugu scenario, threatens the financial viability of the power sector and could lead to its collapse. They reiterate their position that states can only regulate the price of electricity generated, transmitted, and distributed within their own borders, not electricity supplied from the national grid, which constitutes a significant portion of the power consumed in most states. This crucial distinction lies at the heart of the ongoing dispute.
State governments, represented by the Forum of Commissioners for Power and Energy in Nigeria (FOCPEN), insist that the amended Electricity Act explicitly grants them the authority to regulate distribution and set tariffs, regardless of the electricity source. They emphasize their commitment to providing affordable electricity to their citizens and dismiss the Discos’ warnings as fear-mongering. They highlight that their tariff adjustments, particularly in Enugu, solely target distribution costs and do not interfere with the costs associated with generation and transmission, which remain under NERC’s purview.
The Enugu case serves as a microcosm of the broader national debate. While MainPower initially complied with the EERC’s order, restoring power at the previous higher tariff, the EERC has accused the Disco of violating the tariff order and threatened sanctions. This back-and-forth highlights the urgent need for clear regulatory guidance from NERC. NERC’s earlier statement, suggesting states should subsidize any tariff reductions that impact national grid costs, adds another layer of complexity to the situation. This standoff emphasizes the fundamental disagreement about the interpretation of the Electricity Act and the respective roles of state and national regulators. The resolution of this dispute is crucial for the future of Nigeria’s power sector and the provision of stable and affordable electricity to its citizens. A clear delineation of authority and a framework for collaboration between state and federal regulators are essential for long-term stability and investment in the sector.
