Oyo Government Assumes Regulatory Powers As NERC Handover

Oyo Government Assumes Regulatory Powers As NERC Handover

The Nigerian Electricity Regulatory Commission (NERC) on Tuesday, August 6, announced the transfer of regulatory oversight of electricity market in Oyo State to the Oyo State Electricity Regulatory Commission (ISERC).

This was contained in an order dated 5th August 2024, titled: “Order No: NERC/2024/110.”

The commission noted that the transfer takes effect from August 6, 2024.

“This order takes effect from 6 August, 2024,” said the chairman Engr. Sanusi Garba and Commissioner Legal Licensing and Compliance , Barrister Dafe Akpeneye, who signed the document.

Recall that NERC exercises regulatory oversight of the Nigerian Electricity Supply Industry (“NESI”) as the apex sectoral regulator in accordance with powers conferred by the Electricity Act 2023 (“EA” or the “Act”).

The electricity market in the Federal Republic of Nigeria was previously centralised and the move to decentralisation was achieved when presidential assent was granted to the amendment of relevant portions of the Constitution of the Federal Republic of Nigeria (“CFRN”) on 17 March 2023.

Paragraph 14(b) Part II of the Second Schedule to the 1999 CFRN which provides that “a House of Assembly may make laws for the State with respect to generation, transmission, and distribution of electricity to areas not covered by a national grid system within that State.”

The order noted: “In compliance with the amended Constitution of the Federal Republic of Nigeria (CFRN) and the Electricity Act 2023 (Amended), the Nigerian Electricity Regulatory Commission (“NERC” or the “Commission”) has issued an order to transfer regulatory oversight of the electricity market in Oyo State from the Commission to the Oyo State Electricity Regulatory Commission (OSERC).”

With the EA 2023, the Commission retains the role as a central regulator with regulatory oversight on the inter-state/international generation, transmission, supply, trading and system operations.

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.

Based on this, according to NERC, the Government of Oyo state complied with the conditions precedent in the laws, duly notified NERC and requested for the transfer of regulatory oversight of the intrastate electricity market in Oyo State.

The transfer Order by NERC has the following provisions: – Direct Ibadan Electricity Distribution Company (IBEDC) to incorporate a subsidiary (IBEDC SubCo) to assume responsibilities for intrastate supply and distribution of electricity in Oyo State from IBEDC.

It also directed that IBEDC shall complete the incorporation of IBEDC SubCo within 60 days from 6th August 2024.

The sub-company, said the order ,shall apply for and obtain licence for the intrastate supply and distribution of electricity from OSERC, among other directives.

The order insisted that all transfers envisaged by this order shall be completed by 5th February 2025.

NERC said: “The Commission shall prepare register of licensees, permit holders, certificate holders and holders of any other authorisations from the Commission in Oyo state.

“The register shall be delineated along the lines of authorised activities and use of the national grid for their activities.

“A transfer of regulatory oversight notification shall be issued by the Commission to the companies in the register whose activities are limited within Oyo State informing the entities of the transfer/assumption of regulatory oversight for their activities by OSERC.

“All cross-border transactions involving the national grid shall be sublect to the approval of the Commission in accordance with the CERN and EA.

“IBEDC shall confirm to the Commission the contractual details for the supply of energy and capacity that shall supply IBEDC SubCo in Oyo State, and where reliance shall be made on the national grid or other interstate sources of generation; IBEDC SubCo shall seek appropriate authorisation/approval from the Commission in accordance with the CERN and EA.

“OSERC shall have the exclusive responsibility of determining and adopting an end-user tariff methodology applicable within its area of regulatory oversight.

“Where IBEDC SubCo receives electricity from grid connected plants, the contracts and tariffs applicable for generation and transmission services shall be approved by the commission.

“The final end-user tariffs approved by OSERC shall be the exclusive tariffs that apply in Oyo State and all tariff policy support for end-use customers in Oyo State shall be the responsibility of the Oyo state government.

“All transfers envisaged by this order shall be completed by 5 February 2025.Dated this 5th day of August 2024.”