Edo State becomes 6th state to gain authority for state-level electricity market oversight, effective August 21, 2024
… transfer of assets, liabilities, other relevant contractual rights to be completed by 20 February 2025
Oredola Adeola
The Nigerian Electricity Regulatory Commission (“NERC” or the “Commission”) has issued an order to transfer regulatory oversight of the electricity market in Edo State from the Commission to the Edo State Electricity Regulatory Commission (ESERC), effective from 21 August 2024.
This was contained in NERC’s Order No: NERC/2024/1 11, signed by Musiliu Oseni, Vice-Chairman Commissioner, and Nathan R. Shatti, Finance & Management Service, dated August 20, 2024, and obtained by Advisors Reports.
According to NERC, the order complied with the amended Constitution of the Federal Republic of Nigeria (CFRN) and the Electricity Act 2023 (Amended).
Advisors Reports gathered that six states—Enugu State, Ekiti State, Ondo State, Imo State, Oyo State, and now Edo State—have been granted the authority to transfer regulatory oversight of their electricity market to a state-level regulator.
The Commission emphasised that with the EA 2023, it retains the role as a central regulator with regulatory oversight on the inter-state/international generation, transmission, supply, trading and system operations.
The statement said, “The EA also mandates any state that intends to establish and regulate intrastate electricity markets to deliver a formal notification of its processes and requests NERC to transfer regulatory authority over electricity operations in the state to the State Regulator.
NERC further revealed that the Government of Edo State, is therefore based on the NERC’s Order, complied with the condition’s precedent in the laws, duly notified NERC, and requested for the transfer of regulatory oversight of the intrastate electricity market in Edo State.
NERC has therefore, by provisions of the EA, directed the Benin Electricity Distribution Company (BEDC) to incorporate a subsidiary (BEDC SubCo) to assume responsibilities for the intrastate supply and distribution of electricity in Edo State from BEDC.
BEDC shall complete the incorporation of BEDC SubCo within 60 days from 21st August 2024.
The Commission noted that the sub-company shall apply for and obtain a licence for the intrastate supply and distribution of electricity from ESERC, among other directives.
NERC also revealed that all transfers envisaged by this order shall be completed by 20th February 2025.
Furthermore, BEDC has been directed to create an Asset Register of all its power infrastructure located in Edo State, evaluate and allocate contractual obligations and liabilities related to its subsidiary’s operations in the state, and identify all applicable trading points for energy off-take for BEDC SubCo in Edo State.
Additionally, BEDC has been instructed to determine the number of employees needed to operate as a standalone public utility in Edo State and to transfer the relevant assets, contractual obligations, liabilities, and employees to BEDC SubCo.
The order also requires BEDC to provide the Commission with details of the contractual arrangements for supplying energy and capacity to BEDC SubCo in Edo State, including any reliance on the national grid or other interstate generation sources.
BEDC SubCo must seek the appropriate authorization and approval from NERC under the CFRN and EA.
NERC has also granted Edo State ERC the exclusive responsibility for determining and adopting an end-user tariff methodology within its regulatory jurisdiction.
Meanwhile, NERC stated that any contracts and tariffs for generation and transmission services, where BEDC SubCo receives electricity from grid-connected plants, will be subject to the Commission’s approval.