The Nigerian Electricity Regulatory Commission (NERC) has declared that any state government choosing to slash electricity tariffs must be prepared to fund the resulting subsidy, stressing that no state has jurisdiction over the national grid or power stations operating under federal licences.
The regulatory body issued this warning in response to the Enugu State Electricity Regulatory Commission’s (EERC) controversial decision to reduce the Band A electricity tariff from N209 per kilowatt-hour (kWh) to N160/kWh, effective August 1, 2025. The move has triggered widespread debate within the Nigerian Electricity Supply Industry (NESI).
In a statement on Thursday, NERC clarified that while states now have regulatory powers over intrastate electricity markets, their jurisdiction does not extend to electricity sourced from the national grid.
The Commission stated:
“States must holistically incorporate the wholesale costs of grid supply to their states without deviation in their tariff designs. Alternatively, they must provide subsidies for any shortfall to avoid distorting the market and jeopardising the financing of the generation and transmission segments of NESI.”
The regulator cited Section 34(1) of the Electricity Act, which mandates it to ensure market stability, efficient electricity structures, and the optimal utilisation of resources. It also warned that no regulatory decision must expose the national grid to financial crises.
The tariff cut by the EERC has raised alarm among power distribution companies (DisCos) and generation companies (GenCos). The Association of Nigerian Electricity Distributors (ANED) and the Association of Power Generation Companies (APGC) warned that states have no legal right to set tariffs for electricity generated and transmitted nationally.
ANED’s Chief Executive Officer, Sunday Oduntan, cautioned Band A customers in Enugu State not to expect 20-hour daily power supply at the reduced rate, adding:
“There can’t be 20-hour power supply at N160/kWh when the national generation tariff alone averages N112.60/kWh. Customers in other states are now demanding similar cuts, and some are even refusing to pay their bills, which could destabilise the power sector.”
Similarly, APGC’s CEO, Joy Ogaji, argued that Enugu’s tariff reduction was based on an “imaginary subsidy,” stating that no formal government policy currently supports such subsidies.
“You cannot regulate what you don’t produce. States cannot claim a subsidy from a federal electricity market they want to be independent of,” she said.
Despite the backlash, the EERC defended its decision, insisting that the tariff adjustment was based on MainPower Electricity Distribution Company’s cost structure.
In a statement, Reuben Okoye, EERC’s Commissioner for Electricity Market Operations, stated:
“The commission is building a sub-national electricity market that is transparent, accountable, and sustainable. Based on MainPower’s cost of service, there was no justification to keep Band A tariffs at N209/kWh.”
The EERC further clarified that its tariff review did not interfere with the national generation cost but aimed to reflect local realities and ensure affordability.
NERC confirmed that it is engaging with the EERC to address any “misinterpretations or misunderstandings” regarding the tariff order and to ensure compliance with national market cost recovery principles.
The Commission assured stakeholders that the electricity market would remain financially sustainable while urging states to respect federal regulations or be ready to provide subsidies for any tariff reductions.
Meanwhile, industry experts warn that unless properly coordinated, such state-level interventions could discourage investments in the power sector and worsen Nigeria’s existing N5.2 trillion unpaid tariff shortfall.