The Nigerian Electricity Regulatory Commission (NERC) has officially transferred regulatory oversight of the Enugu electricity market to the Enugu Electricity Regulatory Commission (EERC).
This transfer, effective from May 1, 2024, marks the first time NERC has delegated such authority to a state-owned regulatory body.
This strategic shift was detailed in a memo released by NERC, bearing signatures from its Chairman, Sanusi Garba, and Commissioner for Legal, Licensing, and Compliance, Dafe Akpeneye, dated April 22, 2024.
State regulation of Electricity
The transfer is a direct result of recent legislative changes that have decentralized the power sector.
These changes were set into motion in March 2023 when former President Muhammadu Buhari signed amendments to Nigeria’s constitution that removed power generation, transmission, and distribution from the exclusive legislative list, effectively ending the federal government’s sole jurisdiction over these areas.
Under the new legal framework established by the Electricity Act 2023, states now have the authority to manage and regulate their electricity markets.
The amended Paragraph 14(b) Part II of the Second Schedule to the 1999 Constitution empowers state governments to legislate on electricity provision within their territories.
According to NERC, the Enugu Electricity Regulatory Commission (EERC) now holds the exclusive authority to set and adopt end-user electricity tariffs within Enugu State, tailoring these charges to local conditions and requirements.
While EERC manages local tariff methodologies, any electricity sourced from grid-connected plants and the related tariffs for generation and transmission services must still receive approval from the Nigerian Electricity Regulatory Commission (NERC), ensuring alignment with national energy policies.
Ultimately, the final tariffs approved by EERC for consumers in Enugu will be definitive for the state, with the Enugu State Government responsible for supporting and implementing tariff-related policies, ensuring that electricity pricing is both fair and attuned to the specific needs of the state’s residents.
The memo from NERC states, “This regulatory instrument may be cited as the Order of Transfer of Regulatory Oversight of the Electricity Market in Enugu State from NERC to the Enugu State Electricity Regulatory Commission (EERC). This Order shall take effect from May 1, 2024.”
Furthermore, the memo outlines the framework under which states can establish their regulatory authorities and manage the transition of oversight.
According to Section 230 of the Electricity Act 2023, states intending to regulate their electricity markets must notify NERC and the relevant distribution licensee.
NERC is then required to prepare a transition plan within 45 days, detailing the transfer of regulatory responsibilities to the state regulator—a process to be completed within six months of notification.
This decentralization initiative aims to enhance efficiency and responsiveness in the management of electricity services by aligning regulatory oversight more closely with local needs and conditions.
What this means for EEDC
Under the new regulatory order, the Enugu Electricity Distribution Company PLC (EEDC) is mandated to establish a subsidiary, known as EEDC SubCo, under the Companies and Allied Matters Act.
This subsidiary will be responsible for the localized supply and distribution of electricity exclusively within Enugu State.
EEDC must finalize the incorporation of EEDC SubCo within 60 days from the order’s effective date, after which the subsidiary is required to secure a license from the Enugu Electricity Regulatory Commission (EERC) for its operations.
Additionally, EEDC is tasked with clearly defining the geographical boundaries of its network within Enugu State, ensuring that it operates independently of networks in neighboring states by installing boundary meters at all crossing points.
This move is aimed at establishing a self-contained and well-defined electricity distribution framework within the state, enhancing management and regulatory oversight.
What this means in general
The devolution of regulatory powers to states like Enugu represents a significant shift towards a more localized management of electricity services.
This means that states can now tailor their energy policies to better suit the specific needs of their residents, promoting more efficient and sustainable energy use within their jurisdictions.
Role of NERC Moving Forward: NERC will continue to play a pivotal role as the central regulator for inter-state and international electricity transactions, ensuring compliance with national standards and managing overarching issues that transcend state borders.
This includes the regulation of large-scale power generation plants, high voltage transmission networks, and the overall system operation of the national grid.
State Regulation Specifics: States will specifically regulate the generation, transmission, and distribution of electricity within their territories.
This includes licensing local power projects, managing state-owned power assets, and overseeing retail electricity distribution and pricing.
The states will also be responsible for promoting rural electrification projects and integrating renewable energy sources into their local grids.
NERC’s move to cede control to EERC signifies a significant shift in Nigeria’s approach to energy regulation, potentially serving as a model for other states in the federation.