“States Electricity Commission Has No Jurisdiction Over National Grid” – NERC

The Nigerian Electricity Regulatory Commission has said that state governments do not have jurisdiction over the national grid and over electric power stations established under federal laws or operating under licences it issued.

The commission stated this in its reaction to the controversies generated by the Enugu Electricity Regulatory Commission’s decision to slash the Band A tariff.

In a notice on Thursday, the national power regulator advised state governments to reflect the wholesale costs in tariffs or be ready to pay subsidies for any tariff shortfall.

The commission acknowledged that states that have assumed full regulatory oversight over their intrastate markets are now authorized to create and regulate transactions in their state electricity markets, saying this extends to the development of tariff methodologies that shall apply to end-use customers in their respective states.

This came as the power distribution and generation companies warned that states’ absolute power to determine tariffs begins when they start generating and transmitting electricity.

The NERC, in its notice on Thursday, cautioned, “As states do not have jurisdiction over the national grid and over electric power stations established under federal laws/operating under licences issued by the commission; they must holistically incorporate the wholesale costs of grid supply to their states without any qualification or deviation in their design of tariffs for end-use customers in order not to distort the dynamics of the market or be prepared to make a policy intervention by way a subsidy for any deviation in the tariff structure that distorts the wholesale generation, transmission and legacy financing costs in the Nigeria Electricity Supply Industry.”

NERC said no institution would take decisions that expose the national grid and wholesale electricity market to a financial crisis in contravention of express powers granted to them by the constitution.