The Electricity Act of 2023 represents a major shift from the previous Electricity Power Sector Reform Act of 2005 (EPSRA), consolidating various statutes and introducing crucial provisions related to regulatory frameworks, tariff regulation, market structure, consumer rights, investment incentives, and grid management.
A key feature of the Act is the recognition granted to each federated state through its State House of Assembly, allowing states to enact laws concerning electric power—covering generation, transmission, and distribution—within their territories. This empowerment enables states to establish their own regulatory frameworks, although they must still comply with existing laws.
Previously, Nigeria’s electricity value chain was largely centralized at the federal level, even after the privatization of generation and distribution sectors in 2013. With ongoing power challenges, the Act aims to diversify and devolve electricity provision to states, promoting the development of mini-grids operated by Independent Electricity Transmission Network Operators or Independent Electricity Distribution Network Distributors.
Benefits of State Control: Granting states control over their electricity value chains offers numerous advantages, including the ability to tailor regulations to meet local energy needs, encourage innovation, and enhance overall energy reliability and efficiency. This decentralization aims to create a more resilient and responsive energy system across Nigeria.
Key Areas of State-Level Regulation:
- Regulatory Agency Establishment: States will create agencies to oversee the electricity value chain, focusing on generation, transmission, distribution, retail, consumer protection, and compliance.
- Potential Conflicts: Conflicts may arise between the Nigerian Electricity Regulatory Commission (NERC) and state regulators due to differing priorities and interpretations of authority, necessitating collaboration and negotiation to align goals.
- Preemption by NERC Regulations: In conflicts, NERC regulations typically take precedence, but balancing state autonomy with national consistency poses challenges.
- Technical Preparedness: States must ensure they have the technical expertise and planning required to manage the complexities of electricity supply effectively.
- Composition of Regulatory Agencies: State regulatory bodies should be staffed by competent technocrats with experience in the electricity sector, avoiding political influences.
Empowering states to engage actively in the electricity sector is expected to lead to more customized solutions and improved reliability for consumers. Collaboration between NERC and state regulatory authorities is essential to achieve these objectives. States are encouraged to begin implementing state-level electricity provisions in partnership with NERC.
Ogbobine, an oil & gas and energy consultant, can be contacted at pbbine@gmail.com.
