The Nigerian Electricity Regulatory Commission (NERC) has directed the transfer of regulatory oversight of the electricity market in Enugu from NERC to the Enugu State Electricity Regulatory commission in compliance with the electricity act (EA) 2023.
NERC made this known in an order with the number NERC/2024/039 released on Monday stating that the order shall take effect from May 1, 2024 in accordance with the electricity Act 2023 and all transfers envisaged by the order shall be completed by October 22, 2024.
Recall that the electricity market in Nigeria was previously centralised and the move to decentralisation was achieved when presidential assent was granted to the amendment of relevant portions of the Constitution on March 17, 2023, which granted legislative autonomy to federating states.
“Paragraph 14(b) Part II of the Second Schedule to the 1999 CFRN which provides that “a House of Assembly may make laws for the State with respect to generation, transmission, and distribution of electricity to areas not covered by a national grid system within that State” was amended, to “a House of Assembly may make laws for the State with respect to generation, transmission, and distribution of electricity to areas within that State”.
According to the order, Enugu government has initiated the implementation of the provisions of the amendment to the CFRN and the EA; is desirous of assuming regulatory oversight of the intrastate electricity market in Enugu State; has duly notified the Commission and requested for the transfer of regulatory oversight of the intrastate electricity market in Enugu State in compliance with the provisions of the EA.
Hence the act mandates the Commission to develop a transition plan and timeline for the transfer of regulatory oversight of the intrastate electricity market from NERC to EERC upon receipt of a formal notification from the State.
“This Order seeks to commence the process of the transfer of regulatory oversight for the intrastate electricity market in Enugu State from the Commission to EERC in accordance with the CFRN and the EA. Provide a transition plan for the transfer of regulatory oversight for the intrastate electricity market in Enugu State from the Commission to EERC in accordance with the CFRN and the EA and address ensuing transitional matters arising from the transfer of regulatory oversight for the intrastate electricity market in Enugu State from the Commission to EERC,” it stated
The commission directed Enugu Electricity Distribution Company Plc (EEDC) to incorporate as subsidiary (EEDC SubCo) under the companies and allied matters Act for the assumption of responsibilities for intrastate supply and distribution of electricity in Enugu State from EEDC.
“EEDC shall complete the incorporation of EEDC SubCo within 60 days from the effective date of this Order and, EEDC SubCo shall apply for and obtain a licence for the intrastate supply and distribution of electricity from EERC.
“EEDC shall identify the actual geographic boundaries of Enugu State and carve out its network in Enugu State as a standalone network with the installation of boundary meters at all border points where the network crosses from Enugu State into another state.
“EEDC shall create an Asset Register of all its power infrastructure located within Enugu State; Evaluate and apportion contractual obligations and liabilities attributable to EEDC’s operations of its subsidiary in Enugu State; Identify all the applicable trading points for energy offtake for the operations of EEDC SubCo in Enugu State, confirm the number of employees that are required to provide service to Enugu State as a standalone public utility; and transfer the identified assets for operations in Enugu State, contractual obligations, liabilities and employees to EEDC SubCo,” the order stated.
The order added that the Commission shall prepare register of licensees, permit holders, certificate holders and holders of any other authorisations from the Commission in Enugu State and it shall be delineated along the lines of authorised activities and use of the national grid for their activities.
“A transfer of regulatory oversight notification shall be issued by the Commission to the companies in the register whose activities are limited within Enugu State informing the entities of the transfer/assumption of regulatory oversight for their activities by EERC. All cross-border transactions involving the national grid shall be subject to the approval of the Commission in accordance with the CFRN and ΕΑ.
“EEDC shall confirm to the Commission the contractual details for the supply of energy and capacity that shall supply EEDC SubCo in Enugu State, and where reliance shall be made on the national grid or other interstate sources of generation; EEDC SubCo shall seek appropriate authorisation/approval from the Commission in accordance with the CFRN and EA.
“EERC shall have the exclusive responsibility of determining and adopting an end-user tariff methodology applicable within its area of regulatory oversight. Where EEDC SubCo receives electricity from grid connected plants, the contracts and tariffs applicable for generation and transmission services shall be approved by the Commission. The final end-user tariffs approved by EERC shall be the exclusive tariffs that apply in Enugu State and all tariff policy support for end-use customers in Enugu State shall be the responsibility of the Enugu State Government,” the order stated.
