Distribution/End user tariffs reflect the costs of the entire value chain for the Nigerian Electricity Supply Industry (NESI), beginning with fuel for generation plant, on to wholesale generation, through to transmission, distribution, metering and billing and finally to the consumer.
Until customer choice is introduced, the end-user tariffs will be regulated in order to protect the interests of customers. NERC, by law, is required to ensure that prices are cost-reflective; but also to ensure that losses are reduced and as little as possible of the costs of such losses are passed on to customers.
Using the MYTO methodology, the Commission has set end-user tariff to cover the costs of electricity (energy & capacity), transmission use of system cost, regulatory and market administration charges, the Discos’ distribution charges and costs associated with metering, billing, marketing and revenue collection.
In the NESI, all end users of electricity i.e. customers are classified into any of 5 broad Tariff Classes as outlined in the table below. Customers are further categorised into tariff sub classes, by the individual electricity distribution companies (DisCos) based on their average consumption of electricity.
|A customer who uses his premise exclusively as a residence i.e. house, flat, or multi-storied house
|A customer who uses his premise for any purpose other than exclusively as a residence or as a factory for manufacturing goods
|A customer who uses his premises for manufacturing goods including welding and ironmongery
|Customers such as agriculture and agro-allied industries, water boards, religious houses, government and teaching hospitals, government research institutes and educational establishments.
The Commission considers and approves the tariff set by the DisCos for customers in each tariff sub-class based on the specific cost profile of serving that particular tariff sub-class.
National Electric Power Policy and EPSR Act 2005, provide guiding principles for the setting of lifeline tariffs for low-income consumers that are to be the same across the country. Thus, a uniform lifeline tariff of =N=4 per kWh, has been approved by the Commission for the low-income R1 customer sub-class in all eleven DisCos.