Notice of review of the Multi Year Tariff Order (MYTO) Methodology, 2017

1.    The Nigerian Electricity Regulatory Commission (NERC) is an independent regulatory Commission established by the Electric Power Sector Reform Act (2005) with a clear mandate to regulate all aspects of the electricity business in the country. Its principal functions, amongst others, include:

a.    To create, promote and preserve efficient industry and market structures and to ensure optimal utilization of resources for the provision of electricity services
b.    To ensure that prices charged by licensees are fair to consumers and are sufficient to allow the licensees to finance their activities and to allow for reasonable earnings for efficient operations.
c.    To ensure that regulation is fair and balanced for licensees, consumers, investors and other stakeholders.

2.    Section 76(1) of EPSRA subjects the following activities to tariff regulation:
a.    Generation and trading, in respect of which licenses are required pursuant to this Act, and where NERC considers regulation of prices necessary to prevent abuse of market power; and
b.    Transmission, distribution and system operation, in respect of which licenses are required under this Act.

3.    Section 76(2) of the EPSR Act (2005) stipulates that electricity tariffs shall be regulated according to one or more methodologies adopted by the Commission. Following the procedures set out in Section 76 of the EPSR Act 2005, NERC in 2008 established the Multi-Year Tariff Order (MYTO) as the framework for determining the industry pricing structure with a view to delivering a viable and robust tariff policy for the Nigerian Electricity Supply Industry (NESI). The MYTO methodology provides a 15 year tariff path with major reviews every five years, and minor reviews semiannually to consider changes in the following parameters:
a.    Inflation;
b.    Exchange rate;
c.    Gas price;
d.    System planning output generated by TCN;
e.    Available generation capacity; and
f.    CAPEX requirement required to evacuate and distribute the said available generation capacity.

4.    The Commission intends to further review the methodology. In particular, the Commission is setting out for consultation the following proposed changes:
a.    Reduction in the time period for conducting minor reviews to update tariffs from every six month (semi-annually) to monthly or quarterly;

b.    Reviewing the frequency of updating end-user tariffs with the minor review results as well as accounting for over/under recoveries recorded between minor reviews from semi-annually to monthly, quarterly or annually;

c.    Make provision to include Revenue Decoupling Mechanism in the form of annual energy adjustment clause to track variances between actual and allowed revenues and make periodic true ups annually or more frequently (semi-annually, quarterly, monthly). Customers/utilities (TCN & Discos) will be compensated for net changes in actual generation capacity in relation to assumed projections.

For full details on the MYTO methodology, Please visit our website: www.nerc.gov.ng.

All reactions, comments, queries and further enquiries should be sent for the Commission’s consideration within 21 days from the date of this publication to This email address is being protected from spambots. You need JavaScript enabled to view it.with copies to:

Sharfuddeen Z. Mahmoud    
Market Competition and Rates Division    
Nigerian Electricity Regulatory Commission
Adamawa Plaza, Plot 1099 First Avenue
Off Shehu Shagari Way, CBD, Abuja
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Aisha Mahmud
Market Competition and Rates Division    
Nigerian Electricity Regulatory Commission
Adamawa Plaza, Plot 1099 First Avenue    
Off Shehu Shagari Way, CBD, Abuja
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Sanusi Garba
VICE CHAIRMAN