Aba Power Writes NERC Seeking Tariff Review

Uche Cecil Izuora

Aba Power has approached the Nigerian Electricity Regulatory Commission (NERC) demanding approval to hike tariff to N240/kWh from N122 per kilowatt hour.

This represents about 97 per cent tariff rise.

The NERC said the company appealed for a cost-effective tariff, as the current charge is far below its cost.

Aba Power is the electricity distribution company of Aba Integrated Power Project licensed by the NERC in 2007 to generate and distribute power from its 141MW power plant.

The company took over all distribution assets in the Aba and Ariaria Business Units known as the Aba Ring Fence Area from the Enugu Electricity Distribution Company on February 16, 2022.

Since the acquisition of the ARFA, NERC said Aba Power has undertaken investments in the ARFA to make the network stable and efficient.

The NERC says Aba Power periodically procures electricity from NDPHC’s Alaoji Generation Company under a PPA approved by the Commission and sells to all customer classes in the ARFA comprising nine out of the 17 Local Government Areas of Abia State.

The NERC said, “Aba Power has been operating with a tariff approved in October 2022. Hence the request for approval of a tariff for APLE to reflect the current macro-economic conditions that affect APLE operations after the tariff review,”.

The key highlights of APLE’s application include changes to the Nigerian and United States inflation and foreign exchange rates; changes in an increase in generation cost from N21/kWh to N133.2/kWh; and a review of the Aggregate Technical Commercial and Collection losses applied in tariff determination to 21.26 per cent to reflect operating realities.

The company said the new tariff would allow it to have commensurate return on investments which include its multibillion naira distribution infrastructure and the bifurcation and rehabilitation of over 400km of 11kv lines.

It said that the cost-reflective tariff in 2023 stood at N122, saying the cost-reflective this time was N240/kWh

In a consultation paper issued on Thursday, the NERC said, “This document sets out for consultation, the proposed rate case review of Aba Power Limited Electric application in the determination of distribution tariff for efficiency improvements with a view to passing on the cost to end-users. Specifically, the consultation focuses on a proposed review of end-user cost-reflective tariff from the weighted average tariff of N122/kWh in the approved Multi-Year Tariff Order 2023 (“MYTO 2023”) for APLE to N240.8/kWh.

This consultation process is an integral part of the Extraordinary Tariff Review process the commission is undertaking to reflect the changes in macroeconomic indices, capital investments and increase in generation cost in accordance with the extant industry rules.

“The consultation paper solicits stakeholders’ comments and reviews with a view to improving supply availability and reliability and fair tariff to allow recovery for prudent costs and a reasonable return on capital invested by APLE.”

This consultation paper is to draw the attention of the industry stakeholders – GenCos, DisCos, large energy users, and other interested parties, the commission noted.

Respondents were asked to submit their input in response to the proposal in this document.

“The submission may include a modification or alternatives to the proposal for further consideration by the commission.

Pursuant to the review of stakeholders’ comments, a public hearing will be held in Abuja in December 2024. Responses are expected no later than 21 days from the date of the publication of this consultation paper.

“Upon completion of the consultation process, the commission’s decision shall be incorporated in the MYTO model and accordingly reflected in the subsequent order,” the commission said.