The Nigerian Electricity Regulatory Commission (NERC) has warned states not to unilaterally set electricity tariff below cost.
This warning follows the Enugu Electricity Regulatory Commission’s (EERC) move to reduce the Band A tariff, causing widespread concern.
According to NERC, states must reflect actual wholesale generation and transmission costs in their electricity tariff designs without exception.
If a state decides to reduce tariffs, it must pay subsidies to cover the resulting shortfall and market imbalance.
NERC emphasized that although states now regulate intrastate electricity markets, they still rely on power from the national grid.
Therefore, any tariff decision that ignores federal cost structures may destabilize the entire electricity supply chain across the country.
Enugu’s regulator recently lowered the Band A tariff to ₦160.4 per kilowatt-hour, far below the market-reflective rate.
This was done by cutting the average generation tariff from ₦112.60 to ₦45.75, creating a ₦66.85/kWh subsidy
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