NERC transfers oversight of electricity market to bureaus in Ekiti, Ondo

The Nigerian Electricity Regulatory Commission (NERC) has directed the transfer of regulatory oversight of the electricity market in Ekiti from NERC to the Ekiti State Electricity Regulatory Bureau (EERB).

It also directed the regulatory oversight of the electricity market in Ondo State from the Commission to the Ondo State Electricity Regulatory Bureau (OSERB) in compliance with the amended constitution of the Federal Republic of Nigeria (CFRN) and the Electricity Act (EA) 2023.

The commission had earlier directed the transfer of regulatory oversight of the electricity market in Enugu from the commission to the Enugu State Electricity Regulatory Commission (EERC) in an order with the number NERC/2024/039 released on Monday

The Commission made this known in an order with the number stating that the order shall take effect from May 1, 2024, under the electricity Act 2023 and all transfers envisaged by the order for the three states shall be completed by October 22, 2024.

The electricity market in the Federal Republic of 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 of the Federal Republic of Nigeria March 17, 2023.

This granted legislative autonomy to federating states in the Federal Republic of Nigeria by empowering the sub-national governments to legislate on the generation, transmission and distribution of electricity within each respective state

“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, the three states have initiated the implementation of the provisions of the recent 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, EERB and OSERB upon receipt of a formal notification from the State.

NERC explained that Ekiti and Ondo state have complied with the conditions precedent in the laws, duly notified NERC and requested for the transfer of regulatory oversight of the intrastate electricity market in the states.

The commission therefore, emphasized that the transfer order has directed Benin Electricity Distribution Company (BEDC) and Ibadan Electricity Distribution Company PLC (IBEDC) to incorporate a subsidiary (BEDC SubCo and IBEDC SubCo) to assume responsibilities for intrastate supply and distribution of electricity in Ekiti and Ondo State from BEDC and IBEDC.

The order added that the Commission shall prepare a 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 Ekiti and Ondo states informing the entities of the transfer/assumption of regulatory oversight for their activities by EERB and OSERB. All cross-border transactions involving the national grid shall be subject to the approval of the Commission in accordance with the CFRN and ΕΑ.

“EERB and OSERB shall have the exclusive responsibility of determining and adopting an end-user tariff methodology applicable within its area of regulatory oversight. Where the SubCos 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 the Bureaus shall be the exclusive tariffs that apply in Ekiti and Ondo State and all tariff policy support for end-use customers in the states shall be the responsibility of the Ekiti and Ondo State Government.”

The commission stressed that it retains the role as central regulator with regulatory oversight on the inter-state/international generation, transmission, supply, trading and system operations based on the provision of the EA 2023

It stressed that EA 2023 mandates any state that intends to establish and regulate intrastate electricity markets to deliver a formal notification of its processes and requests NERC to transfer regulatory authority over electricity operations in the state to the State Regulator.

“BEDC and IBEDC shall complete the incorporation of BEDC SubCo and IBEDC SubCo within 60 days from 22 April 2024 and the sub companies shall apply for and obtain licences for the intrastate supply and distribution of electricity from EERB, among other directives. All transfers envisaged by this order shall be completed by 22 October 2024,” it stated.