The controversy surrounding electricity pricing deepened on Monday as power generation and distribution companies (Gencos and Discos) clashed with state electricity regulators following Enugu State’s decision to slash Band A tariffs. The Enugu Electricity Regulatory Commission (EERC) ordered a reduction in electricity costs for Band A customers from N209/kWh to N160/kWh, effective August 1, 2025, sparking nationwide interest and fierce opposition from key industry players.
The Gencos, through the Association of Power Generation Companies (APGC), warned that such a tariff cut poses a grave threat to the already fragile power sector. They insisted that the revised tariff fails to reflect the actual cost of electricity generation, which averages over N200/kWh, and could worsen the sector’s liquidity crisis. The APGC Chief Executive Officer, Joy Ogaji, revealed that Gencos are already owed over N5 trillion, while the Federal Government’s 2025 budgetary allocation of N900 billion for electricity support remains insufficient to cover even half of the monthly N250 billion generation invoices.
Despite the Gencos’ warnings, other states with independent electricity regulatory powers signaled interest in following Enugu’s footsteps. Ondo, Plateau, Lagos, and Kogi states confirmed plans to review electricity tariffs, citing the need to alleviate the financial burden on residents.
The Plateau State Electricity Commission Chairman, Bagudu Hirse, said his commission would focus on reducing electricity costs “to make life better for citizens.” Similarly, Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, stated that Lagos would announce its own tariff structure soon but would proceed cautiously due to the state’s significant 50% share of national electricity consumption.
Ondo State Commissioner for Energy, Johnson Alabi, disclosed that the state is already negotiating power purchase agreements to enable tariff autonomy, while Ekiti State said it would continue to adopt the Nigerian Electricity Regulatory Commission (NERC) Multi-Year Tariff Order until further notice.
Power generation and distribution companies strongly opposed the states’ tariff slashes, accusing regulators of populist policies that could cripple investments. The Gencos argued that the assumption of Federal Government subsidy for electricity generation is misleading.
“It is imperative to state that there is no Federal Government policy on subsidies; it is only a debt accumulation. The N45/kWh subsidy assumed by the EERC leaves a 60% cost gap, which is dangerous for the market,” Ogaji said.
A senior Disco official, who spoke on condition of anonymity, described Enugu’s move as “over the bar” and unrealistic, questioning how the state would fund the shortfall. “Electricity must be cost-reflective. No investor will put money in a market where they can’t recover costs,” he said, adding that any shortfall must be borne by the states, not the Federal Government.
Responding to the backlash, EERC Chairman, Chijioke Okonkwo, defended the tariff reduction, describing it as a data-driven, cost-reflective intervention made possible by Federal Government subsidies. He explained that the commission had worked for over six months on the new Tariff Methodology Regulation of 2024, which ensures that operators’ tariffs are based on transparent cost models, including inflation, operating expenses, and estimated energy losses.
Okonkwo warned, however, that if the Federal Government withdraws subsidies, Band A tariffs could rise significantly above the current N160/kWh.
Power sector analysts expressed mixed reactions. Tayo Adegbenle, founder of PowerUp Nigeria, cautioned that Enugu might have underestimated the financial implications, urging regulators to ensure sustainable cost recovery to avoid disincentivizing investors. Another expert, Bode Fadipe, noted that while the tariff cut appears consumer-friendly, its long-term impact on the power market remains uncertain.
The Electricity Act 2023 granted states the autonomy to regulate their electricity markets, a move meant to improve competition and service delivery. However, the Enugu tariff cut highlights the challenges of balancing affordability with market sustainability. With more states moving toward tariff reductions, the coming months will test whether state-controlled electricity markets can maintain financial stability while easing consumers’ economic burden.