NERC hikes electricity tariff for Band ‘A’ customers

In accordance with an order from the Nigerian Electricity Regulatory Commission (NERC), Ikeja Electric (IE) has implemented a tariff adjustment.

The tariff for Band A consumers of Kaduna Electric has been revised from N206.80/kWh to N209.5/kWh, effective July 1, 2024.

The management of the Distribution Companies (DisCos) communicated this increase through a notice on their website. This adjustment follows NERC’s approval for operators to conduct monthly market reviews based on macroeconomic parameters such as foreign exchange rates, inflation, and gas prices.

IE attributed the tariff hike to rising gas costs and fluctuations in foreign exchange rates, which impact power generation expenses. These factors necessitate tariff adjustments to address market shortfalls, ensure liquidity in the sector, and maintain appropriate product pricing.

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In April, NERC had approved a significant increase in electricity tariffs for Band A customers, raising rates from N66/kWh to N225/kWh due to a surge in the foreign exchange rate from N919/$ to N1,463/$. However, in May, the Commission reduced the tariff for Band A customers to N206.80/kWh, an 8.1% decrease.

Kaduna Electric is the first to announce this latest tariff review, expected to be implemented across all DisCos. This follows NERC’s July 2024 Supplementary Order under the Multi-Year Tariff Order (MYTO).

NERC now adjusts tariffs monthly to reflect changes in the average exchange rate, inflation, and other economic indices, a shift from the previous MYTO structure, which set tariffs for five-year periods with interim adjustments every six months.

According to Abdulazeez Abdullahi, Head of Corporate Communication at Kaduna Electric, the current review, effective July 1, 2024, affects both prepaid and postpaid customers. He assured Band A customers of continued 20-24 hour daily electricity supply as per the Service-Based Tariff regime, while tariffs for Bands B, C, D, and E remain unchanged.

Kingsley Okotie, spokesperson for the Electricity Distribution Company, confirmed the NERC-approved upward adjustment for Band A customers, marking the third increase in the last four months. Acting Managing Director of IBEDC, Francis Agoha, reiterated that the new tariff for Band A customers is N209.50/kWh, effective immediately.

Agoha highlighted that the adjustment is driven by economic factors, including exchange rate fluctuations, inflation, generation capacity, and gas costs. These factors have significantly impacted operational costs, and the revised tariff aims to mitigate financial pressures while maintaining high-quality electricity services.

He assured that this adjustment only affects Band A customers, with tariffs for Bands B, C, D, and E remaining unchanged. Agoha emphasized the company’s commitment to providing reliable and efficient electricity services, ensuring customers receive the best value for their money.

The electricity tariff adjustment reflects ongoing efforts to balance operational costs and service quality, ensuring sustainable power supply across Nigeria.