The Forum of Commissioners of Power and Energy in Nigeria (FOCPEN) has declared its support for the Enugu State Electricity Regulatory Commission (EERC)’s decision to reduce the electricity tariff for Band A customers under MainPower Electricity Distribution Limited, despite backlash from power generation companies (GenCos).
This was contained in a statement jointly signed on Wednesday by the Chairman of FOCPEN and Commissioner for Power and Renewable Energy, Cross River State, Prince Eka Williams, and the Secretary of the Forum and Commissioner for Power, Renewable Energy and Transport, Benue State, Barr. Omale Omale.
The statement read, in part, “It is crucial to understand that Enugu State’s actions are fully aligned with the provisions of the Constitution of the Federal Republic of Nigeria, the Electricity Act 2023, and Enugu State electricity laws and regulations. These legal frameworks empower States to regulate their intra-state electricity markets, including determining and implementing electricity tariffs within their jurisdiction, which are fair to electricity consumers and sufficient to allow licensees to recover their operating expenses and investments.
“FOCPEN wishes to also clarify that the EERC’s tariff order followed a comprehensive and meticulous review process that involved a thorough examination of the capital expenditure (Capex) and operational expenditure (OpEx) assumptions of MainPower Electricity Distribution Company, the State electricity distribution company. This rigorous assessment was conducted using data and information provided by the distribution company itself. EERC also carried out a rigorous assessment of MainPower’s existing customer tariff classification and regulatory asset base,” the Forum noted in the statement.
The group noted further that while Enugu state has, based on its specific market conditions and regulatory findings, adjusted its Band A tariffs downwards, this does not dictate a uniform approach for other states of the Federation.
Furthermore, FOCPEN assured investors in the Nigerian Electricity Supply Industry (NESI) that States are not seeking to arbitrarily downgrade tariffs, nor depend on unsustainable electricity subsidies by the Federal Government.
The EERC earlier approved a new electricity tariff for MainPower Electricity Distribution Limited, successor to the Enugu Electricity Distribution Company (EEDC), reducing the Band A rate from N209 per kilowatt-hour (kWh) to N160/kWh.
The revised tariff will take effect from August 1, 2025.
According to the EERC, the revised tariff is “cost-reflective” and accounts for the federal government’s ongoing subsidy on power generation, ensuring consumers benefit from the government’s financial support.
EERC Chairman, Chijioke Okonkwo, said the tariff cut followed the Commission’s comprehensive review of MainPower’s tariff and licence applications.
However, the decision has drawn criticism from power generation companies (GenCos), who argue that the reduced tariff is based on flawed assumptions and could jeopardize the already fragile national power sector.
In a statement issued on Monday by the Chief Executive Officer of the Association of Power Generation Companies, Joy Ogaji, the GenCos stated that the tariff revision sets a precedent for all other states and fails to reflect the true cost of electricity generation.
Ogaji warned that the N45 per kWh being covered leaves a 60 per cent cost gap that EERC assumed would be filled by the Federal Government, despite no official or cash-backed subsidies in place.
“This tariff issued by EERC has set a precedent for all other States. From their tariff order, only N45 is captured for the generation cost out of N112. This portends a bigger issue in the decentralisation of power or electricity to the states.
“There are many burning questions about dealing with obligations and liabilities (all legacy debts post privatisation but before the exit to state independence) in the decentralisation discourse.
“Does this position mean EERC is looking over to the FG to continue subsidising its electricity? How does EERC account for their share of the accumulated sector debt, or are they assuming assets with no liability?
“Does this position mean EERC is looking over to the FG to continue subsidising its electricity? How does EERC account for their share of the accumulated sector debt, or are they assuming assets with no liability?
“Should EERC not be designing its tariff to remove its dependency on the FG and make its market attractive for investors?” she queried.
The tariff review is backed by the Enugu State Electricity Law 2023, signed into law by Governor Peter Mbah in September 2023.
This Act decentralizes the power sector, giving states authority to regulate electricity within their territories.
Over 16 states began passing their own electricity laws and setting up state regulatory commissions.