The National Electricity Regulatory Commission, NERC, on Tuesday explained why residential electricity consumers would not be affected by the higher tariffs it announced recently.
Following a review conducted by the Commission in the wake of the introduction of a new tariff regime on gas supply to electricity producers in the country, a revised Multi Year Tariff Order, MYTO 2.1, was approved with effect from January 1, 2015.
Under the new arrangement, commercial and industrial consumers, including manufacturers and other business owners, are expected to pay higher tariffs.
The NERC Chairman, Sam Amadi, said in Abuja that the scheduled tariffs hike would not apply to consumers in the residential category (R2 class), which constitute more than 80 per cent of the total population, are exempted till the end of June 2015.
“NERC has not increased tariff for residential consumers for now,” Mr. Amadi said. “While the scheduled increase will apply to other classes of consumers from January 1, 2015, it will not affect residential consumers until after June 2015.”
The chairman said the decision by the Commission to grant the moratorium was carefully considered after due consultations and was guided by the imperative to balance the legitimate demand for adequate electricity supply to ensure fair tariff.
According to the chairman, the decision to exempt the R2 consumers from the latest tariff hike was primarily to protect and promote their interest, while ensuring that operators were given enough time to improve the quality of their services.
Though Mr. Amadi said the decision to adopt a phased approach in increasing tariffs did not go down well with electricity distribution companies, who are concerned that recouping their costs and bottom line would be adversely affected
in the short run, he said NERC’s responsibility was to protect consumers.
“NERC is not anti-business. NERC is mandated by the Electric Sector Power Reform, ESPR, Act 2005 to set tariffs that reflect the cost of operations as a way of attracting and sustaining necessary investments in the sector,” the Chairman said.
Freezing tariff hike for residential consumers, he said, was to use rate setting to grant relief, while providing incentives to the producers to ensure adequate, regular and optimal customer service.
Describing the decision as win-win, the NERC boss said the intension was to give consumers a six months break, while providing operators incentives to improve power supply and services.
The Chairman said the Commission believed it would be unfair to ask consumers to pay higher tariff now in view of their sensitivity to the current levels of service delivery and consumer perception.
He said the Commission said it was concerned with the poor level of meter deployment by the electricity distribution companies, in spite of the credit advancement payment metering initiatives, CAPMI, spearheaded by the Central Bank of Nigeria, CBN in conjunction with NERC.
Under the scheme, a credit line of about N33 billion was opened with soft terms to support the metering plans of the distribution companies to bridge the huge metering gap in the country’s electricity sector.
According to the chairman, the expectation was that the distribution companies would use the moratorium period granted the consumers to improve on their deployment of meters and other operational infrastructure.