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STATES are firming up control of regulatory oversight of electricity business in their respective territory with the support of the Nigerian Electricity Regulatory Commission (NERC).
This development followed the latest transfer of regulatory oversight of the Enugu electricity market to the Enugu Electricity Regulatory Commission (EERC) by NERC.
The states’ control came on the heels of the Electricity Act 2023, signed by President Muhammadu Buhari and later amended by President Bola Tinubu.
The Act removed power generation, transmission, and distribution from the exclusive legislative list, effectively ending the federal government’s sole jurisdiction over these areas.
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This transfer, effective from May 1, 2024, marks the first time NERC has delegated such authority to a state-owned regulatory body.
This devolution of regulatory powers 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.
“This is a good development for the states and they will be more than willing to invest in the electricity business in their respective states and firm up control of regulation in their states. They will be able to set up sub-DisCos which would allow for states to get more involved in the electricity business,” the Executive Director of PowerUp Nigeria, Adetayo Adegbemle told The ICIR.
He also confirmed that the Edo State government had officially applied to take control of regulatory oversight of the electricity business in the state, a move that is expected to attract more power investment in the state.
Accordingly, under the new legal framework, states can 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.”
Under the new regulatory order, the 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 localised supply and distribution of electricity exclusively within Enugu State.
The EEDC must finalise 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 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 neighbouring states by installing boundary meters at all crossing points.
Not just Enugu, NERC has also officially transferred the oversight of Ekiti state’s electricity market to Ekiti State’s Electricity Regulatory Bureau.
The move also symbolises broader decentralisation efforts within Nigeria’s power sector, influenced by recent legislative amendments under the Electricity Act 2023.
This transfer was outlined in a NERC order dated April 22, 2024, marking a significant step towards empowering state-level regulatory capabilities.
An energy lawyer and power sector governance expert, Chuks Nwani, told The ICIR that the Electricity Act 2023 has opened up the states to attract more investments into the electricity business in their respective states.
“Enugu State has shown commitment and has had regulatory oversight. It is good that Enugu State took responsibility for making laws on that. Other states should be able to take advantage of this law on the devolution of regulatory powers,” Nwani said.
The devolution of regulatory powers to states like Enugu and Ekiti represents a significant shift towards more localised 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.
More so, 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.
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.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.