The increase would essentially not be due to extra energy consumption. It would be a result of an increase in the hourly kilowatt rate of electricity supply. Only Ikeja and Eko Distribution Companies have a different story.
Late 2015, Nigerian Electricity Regulatory Commission, NERC, had worked with the 11 Distribution Companies, DisCos, around the country to come up with the MYTO-2015 Distribution Tariff document.
MYTO-2015 is the Multi-Year Tariff Order which the DisCos drafted under the strict guidelines and review of the NERC. The document considers key economic factors such as the exchange rate, inflation rate, cost of gas as well as projected generation capacities of the Generation Companies, GenCos, to extrapolate over a 10 year period, what the DisCos’ operational outlook would be.
Using those economic indicators to plot a trend with other operational elements such as distribution/retail Costs, institutional charges, bulk power procurement (Open Book) and DisCos’ retail tariff, each DisCo drafted its tariff pattern over a 10 year period and submitted its projection to NERC.
Having scrutinised the document, NERC, upon making adjustments where they deemed fit, approved the MYTO-2015.
The MYTO-2015, which is a public document can be easily downloaded from NERC’s official website here. The document dated 18th of December reveals that almost every class of consumers across 9 of the 11 DisCos would experience an increase in their tariffs. Only Ikeja and Eko DisCos show a different trend.
A careful look at the document uncovers a fascinating pattern- all the DisCos have a year in which their tariffs peak and after which, they begin to gradually reduce.
For Ikeja and Eko DisCos, that peak year is 2016. From this year, the cost of a kW/h supply of electricity gradually decreases for all classes of their consumers with extremely few deviations.
For Abuja, 2017 is the year while the other DisCos have the following peak years:
Edo- 2017/2018, Enugu- 2018, Ibadan- 2019, Jos- 2023, Kaduna-2018, Kano-2019, Port Harcourt- 2019 and Yola-2019.
What this indicates is that, as long as MYTO-2015 continues to be the working document of the DisCos, the tariff regime would continue to experience yearly increase until we get to the peak year of the DisCo in question.
Since last year is the peak year for Eko and Ikeja, consumers in those areas would pay relatively lower rates from this year but in the other 9 DisCos, the consumers would have to keep paying relatively higher rates while they look forward to the peak years of their respective DisCo for some reprieve.
It is however worthy of note that the economic indicators on which the MYTO-2015 was drafted have shifted position. Our correspondent was able to get access to the DisCos detailed projections and reports that many of the values used in drawing the current MYTO are no longer reflective of the current economic situation. The exchange rate used, for instance, is N197 to $1- CBN official rate from the end of October 2015. The inflation rate in the calculation was also 8.3% at the time. It has since climbed to 18.3% according to the National Bureau of Statistics.
The MYTO-2015 also provides for a minor review and a major review. A minor review is to happen bi-annually while a major review would be done after five years.
Industry players are saying that the document is due for review in the light of the current economic situation.