Federal Court Stops NERC, DisCos From Increasing Electricity Tariffs

Federal Court Stops NERC, DisCos From Increasing Electricity Tariffs

By Emmanuel Cornelius | News Reporter on January 13, 2020
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As controversy trails, the planned hike electricity tariffs in the country, Justice Muslim Hassan of the Federal High Court, Lagos has ordered the Nigeria Electricity Regulatory Commission, NERC, and electricity distribution companies, DisCos, not to implement the proposed over 40 percent increase in the charges.

The court further directed NERC and the DisCos to maintain the status quo until the hearing and determination of a suit filed by the Incorporated Trustees of Human Rights Foundation, challenging the tariff hike.

The group had contended that “the implementation of the purported minor review of the Multi-Year Tariff Order will create unquantifiable hardship and damages on Nigerian electricity consumers.”

It also argued that consumers would be made to pay very high tariffs, which had been increased by over 40 percent across the board of the current bills.

The respondents in the suit are NERC, the Bureau of Public Enterprises, BPE, the Nigeria Bulk Electricity Trading Company Plc, and the minister of power.

Others are the Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt, Yola, Eko, Ibadan, and Jos electricity distribution companies.

In the affidavit filed in support of the suit and deposed to by a lawyer, Theodora Ubabunike, the human rights group claimed that “it will amount to a great injustice to impose arbitrary electricity tariff on Nigerian electricity consumers.”

The group also averred that “Nigerians will suffer monumental losses as they would not be able to access power at very high tariff. I know that Nigerians are entitled to access public amenities like electricity power.”

Also, in an ex-parte application moved before Justice Hassan by one Anaje Chinedu, the applicant prayed for “an order of interim injunction restraining NERC from taking any step towards the implementation of the purported Minor Review of the Multi-Year Tariff Order 2015 and the Remittance Order 2019” pending the hearing and determination of the motion on notice filed by the group.

After listening to the argument by the plaintiff’s lawyer, Justice Hassan declined granting the ex-parte application but instead ordered the parties to maintain the status quo.

The judge held: “It is hereby ordered that the status quo ante bellum shall be maintained by the parties in this suit pending the determination of the motion on notice.”

Hassan adjourned till January 20, 2020 for the hearing of the motion on notice.

Meanwhile, NERC has reassured Nigerians that it would not implement the new tariff as contained in the last review for December 2020 until its planned consultations with stakeholders on the matter are concluded.

In a statement issued on Tuesday, January 7, 2020, by the commission’s general manager, Public Affairs, Unman Arabi, he said that “the attention of the Nigerian Electricity Regulatory Commission has been drawn to reports in the media that an immediate increase in end-user electricity tariffs has been approved by NERC.

“The Electric Power Sector Reform Act provides that the commission shall determine and periodically review electricity tariffs charged by the electricity distribution companies, DisCos, and to provide an opportunity for utilities to recover efficient costs of operation and a reasonable return on investment.

“The current tariff methodology adopted by the commission provides for a determination of a tariff trajectory over a five-year planning horizon and biannual minor tariff reviews taking into account the impact of inflation, rate of foreign exchange, gas prices and energy available to consumers.

“The Minor Review Order, MRO, released by the commission on January 3, 2020, has no immediate impact on end-user tariffs payable by all classes of electricity customers in the country. The order is to establish the impact of the exogenous macroeconomic parameters and costs outside the control of the utilities in the year 2019 and projections for 2020.

“The macroeconomic indices taken into consideration to conclude this exercise include rate of inflation, foreign exchange, gas price and volume of available electricity.

“The order has further prescribed minimum market remittance threshold payable by the 11 electricity distribution companies and the projected tariff path until 2021.

“However, where actual end-user tariffs are likely to be impacted by the review, the required public and stakeholder consultations shall be implemented in line with requirements of the Electric Power Sector Reform Act and Business Rules of the commission,” he said.

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