NERC to States: reflect true electricity costs or fund tariff gaps

By Joy Baba-Yesufu

The Nigerian Electricity Regulatory Commission (NERC) has directed state governments to either reflect the full cost of electricity supplied through the national grid in their tariffs or provide subsidies to cover any resulting shortfalls.

This follows the commencement of regulatory devolution from the federal level to subnational governments, allowing states to oversee electricity distribution within their jurisdictions. However, NERC cautioned that states do not have jurisdiction over national grid infrastructure or power stations licensed under federal law.

In a statement , the Commission noted:

“States must holistically incorporate the wholesale costs of grid supply into their end-user tariffs. Any deviation must be covered by state-funded subsidies to avoid market distortions and ensure revenue recovery across the electricity value chain.”

The directive comes in response to complaints over the recent tariff order issued by the Enugu State Electricity Regulatory Commission (EERC), which slashed the Band A tariff from N209/kWh to N160/kWh for Mainpower Electricity Distribution Limited (MEDL), a utility company dependent solely on national grid supply.

NERC emphasised that failure to align tariffs with actual wholesale prices risks undermining generation, transmission, and financing obligations in the Nigerian Electricity Supply Industry (NESI).