NERC authorizes Ogun State to regulate electricity market
Sopuruchi Onwuka
The National Electricity Regulatory Commission (NERC) has finally authorized the government of Ogun State to conduct regulatory activities in the electricity market in the state.
According to a public notice circulated from the Public Affairs unit of NERC, the transfer of regulatory function of the electricity supply market in the state is in compliance with the amended Constitution of the Federal Republic of Nigeria and the Electricity Act 2023.
Consequently, NERC declared on Monday that it has transferred regulatory oversight of the electricity market in Ogun State to the Ogun State Electricity Regulatory Commission (OGERC).
The authorization of the OGERC to assume regulatory oversight of the market would be the latest in the series of such transfers which has already happened with eight states which would now regulate their own electricity markets.
The states authorized by NERC to regulate electricity market in their domains include Edo, Ekiti, Enugu, Imo, Kogi, Lagos, Ondo, Oyo and Ogun.
The ceding of regulatory functions to states with policy and regulatory structures conforms to the changes in the federal laws establishing the Nigerian electricity supply industry and with the amended constitutional provisions which bring the power sector into concurrent list.
It would be recalled that devolution of regulatory powers forms the major outcome of the amended Electricity Act 2023, allowing states to oversee electricity market operations in their territories independently.
The transfer, according to NERC, is part of a broader initiative to decentralize electricity regulation, and allow fresh investments in embedded power generation, captive distribution networks, and mini grid systems.
Under the new decentralized regulatory arrangement activated by the amended Electric Power Sector Reform Act of 2023, NERC would now operate as the nation’s central regulator with oversight on inter-state and international generation, transmission, supply, trading and system operations.
The new law provides that states that want to operate internal electricity markets must meet certain requirements which include formal notification and requests on NERC to be authorized to regulate electricity supply market within their domains.
“Based on this, the government of Ogun State complied with the conditions precedent in the laws, duly notified NERC and requested for the transfer of regulatory oversight of the intrastate electricity market in Ogun State.
By the transfer Order, NERC has directed Eko Electricity Distribution Company (EKEDP), Ikeja Electric PLC (IE) and Ibadan Electricity Distribution Company (IBEDC) to incorporate subsidiaries: EKEDP SubCo, IE SubCo and IBEDC SubCo respectively to assume responsibilities for intrastate supply and distribution of electricity in Ogun State from EKEDP, IE and IBEDC.
EKEDP, IE and IBEDC are expected to complete the incorporation of EKEDP SubCo, IE SubCo and IBEDC SubCo within 60 days from 24th December 2024.
These sub-companies shall apply for and obtain licences for the intrastate supply and distribution of electricity from OGERC, among other directives.
All transfers envisaged by this order shall be completed by 23rd June 2025, NERC stated.
The new legislation allows states to now create their own electricity market structures and regulatory authorities, issue licenses for electricity generation, transmission and distribution leading to increased localized control and decision-making in the power sector rather than relying solely on federal authorities.
A key feature of the decentralization is the creation of State Electricity Regulatory Commissions (SERCs), which are conceived to play a crucial role in managing electricity generation, distribution, and consumption within individual states. The move will allow each state to regulate tariffs, ensure good service and enforcement of its regulations in each state.
It is expected that regulatory decentralization would help the states to establish the necessary legal and institutional framework for regulating electricity utilities and promoting investments in their electricity sectors.
