The Nigerian Electricity Regulatory Commission (NERC) has cautioned that state governments lack legal authority over the national electricity grid and federal power stations, issuing a sharp rebuke over Enugu State’s unilateral decision to slash electricity tariffs.
The warning follows a controversial move by the Enugu Electricity Regulatory Commission (EERC) to reduce the Band A electricity tariff from ₦209/kWh to ₦160/kWh—sparking uproar across the nation’s electricity value chain.
In a strongly worded statement on Thursday, the federal regulator said that while states may regulate their own intrastate electricity markets under the amended Electricity Act, this authority does not extend to power sourced from the national grid or regulated under NERC-issued licences.
“States do not have jurisdiction over the national grid or electric power stations established under federal law,” the Commission said. “They must reflect wholesale costs in their tariff design or be prepared to fund the shortfall through a defined subsidy mechanism.”
NERC’s intervention comes amid growing unease within Nigeria’s fragile electricity sector, with power distribution and generation companies warning that subnational regulators cannot slash tariffs for electricity they neither produce nor transmit.
The Enugu State regulator had directed its sole licensee, MainPower Electricity Distribution Limited, to implement the new Band A tariff from August 1. But NERC and industry stakeholders argue that the reduction—particularly of the generation tariff component from ₦112.60/kWh to ₦45.75—introduces an unsubstantiated subsidy of ₦66.85 per unit, threatening cost recovery across the supply chain.
NESI stakeholders have expressed fears that this form of “tariff populism” could push the sector into a financial crisis, with generation companies still owed over ₦5.2 trillion in unpaid shortfalls by the Federal Government.
In its statement, NERC reaffirmed that “neither NERC nor EERC, as responsible regulatory institutions, should take decisions that expose the national grid and wholesale electricity market to a financial crisis.”
It added that it is engaging with EERC to resolve the apparent misinterpretation surrounding wholesale costs and to preserve market integrity.
Industry backlash
The backlash from power sector players was swift. The Association of Nigerian Electricity Distributors (ANED) warned that states must assume full operational control—generation, transmission, and distribution—before setting their own tariffs.
“You can’t deliver 20 hours of power supply at ₦160/kWh. That’s economic fantasy,” said ANED CEO, Sunday Oduntan. “No state currently has the infrastructure or market independence to justify these kinds of tariff decisions.”
Oduntan also flagged the unintended consequences of Enugu’s move, revealing that customers in other states are now demanding similar tariff reductions, with some reportedly refusing to pay their electricity bills.
“This trend is dangerous. It’s fuelling resistance to bill payments and undermining confidence in the sector,” he said.
Echoing that sentiment, Joy Ogaji, CEO of the Association of Power Generation Companies (GenCos), said the EERC’s actions were legally and economically flawed.
“You can’t regulate a product you don’t produce. The power being distributed in Enugu comes from the national grid, not local generation. Any subsidy assumed in their tariff calculations is imaginary and unfunded,” she argued.
Ogaji criticised what she called “regulatory rascality,” warning that undermining market principles could scare away potential investors and destabilise an already fragile sector.
Enugu defends position
In response to the criticism, the EERC maintained that its decision was based on MainPower’s cost structure, not on a manipulation of national generation or transmission costs.
“The commission is focused on building a transparent, accountable, and sustainable sub-national electricity market,” said Reuben Okoye, Commissioner for Market Operations at EERC. “We inherited the current tariff regime, but we have a duty to adjust pricing based on real cost of service to consumers in Enugu.”
But with the power sector still grappling with debt, inflation, and chronic generation shortfalls, observers say the row highlights the urgent need for clearer rules on the devolution of electricity governance in Nigeria’s newly decentralised power market.
For now, NERC’s stance is clear: any deviation from national grid pricing must be matched with funding—no exceptions.
“Cost recovery is not optional,” the commission concluded. “If states wish to diverge, they must take fiscal responsibility for the consequences.”
