Regulation of electricity utilities – sales of power

Approval to sell power

What authorisations are required for the sale of power to customers and which authorities grant such approvals?

In the Nigerian Electricity Supply Industry, a licence issued by NERC is required for the sale of power. Trading licensees such as the DisCos and NBET require their licences for the sale of power. To obtain the licence an application is made to NERC:

  • in a prescribed form and manner;
  • accompanied by the prescribed fee; and
  • accompanied by such information and documentation as NERC may prescribe.
Power sales tariffs

Is there any tariff or other regulation regarding power sales?

The tariff that governs the sale of power by the distribution companies is the MYTO.

The feed-in tariff for renewable energy sourced electricity provides the tariff framework for renewables at a threshold.

Rates for wholesale of power

Who determines the rates for sales of wholesale power and what standard does that entity apply?

NERC determines the rates for wholesale power using the MYTO methodology. The MYTO is a calculation tool set up for the sole purpose of determining rates in the electricity sector, and consists of cost assumptions (ie, installed capacity, capital cost, O & M cost (fixed), O & M cost (variable), capacity factor, auxiliary requirement, economic life, construction period, sent out efficiency, availability and fuel cost). In 2008, at MYTO’s first application in Nigeria, it was restructured to meet the electricity market; domestic parameters were also factored into it before arriving at the current standard it is at today. Currently MYTO 2015 is structured such that a major review is carried out every five years and minor reviews of the indices are expected to be done every six months.

Stakeholder consultation initiated by NERC on the review of the MYTO methodology is ongoing.

Public service obligations

To what extent are electricity utilities that sell power subject to public service obligations?

The unbundling of the electric power sector under the Act was intended to encourage private sector investment. Currently there are no public service obligations on the electricity utility companies although at the transition stage NBET, through the vesting contract, ensures that each DisCo gets a minimum MW from the available capacity procured from the GenCos.