…Disputes Intensify on Tariff Subsidy and Regulation Autonomy
The recent shift by several Nigerian state governments to assert authority over electricity market regulation in line with the amended Electricity Act 2024 has escalated tensions across the nation’s power industry, Business Hallmark has learned.
State regulators insist they are legally empowered by the new Electricity Act to manage electricity supply, pricing, and distribution locally. However, operators, supported by the Nigerian Electricity Regulatory Commission (NERC), argue that these state-level actions overstep their bounds and contradict national policies.
Industry experts warn that unless this dispute is swiftly resolved, it could derail federal efforts to reform Nigeria’s long-struggling electricity sector.
Electricity Act 2024: Empowering States or Worsening Chaos?
President Bola Ahmed Tinubu, in February 2024, signed into law the Electricity Act (Amendment) Bill 2024, which fundamentally restructured the Nigerian power system by granting states the authority to manage electricity generation, transmission, and distribution within their boundaries.
Following its passage through the House of Representatives in July 2023 and the Senate in November 2023, the law came into force in mid-2024, allowing NERC to license state commissions.
As of now, states like Enugu, Ondo, Ekiti, Imo, Oyo, Edo, Kogi, Lagos, Ogun, Niger, and Plateau have successfully secured regulatory rights to oversee electricity affairs within their borders, while others are still in the process of meeting NERC’s conditions.
Enugu Sets a Precedent with New Electricity Tariff
Emboldened by its regulatory mandate, Enugu State on July 19, 2025, through its Electricity Regulatory Commission, issued a new pricing order to MainPower Electricity Distribution Limited—successor to the former Enugu Electricity Distribution Company (EEDC).
The EERC defended its action, citing compliance with the Enugu State Electricity Law of 2023, which grants it the power to oversee energy distribution and pricing in the state.
Subsidies and the New Tariff Model
According to EERC Chairman Engr. Chijioke Okonkwo, the revised tariffs reflect the federal government’s ongoing electricity generation subsidies. He explained that the commission, using the 2024 Tariff Methodology Regulations and a tailored Distribution Tariff Model, derived an average cost of N94/kWh.
This lower rate was possible due to an N45 federal subsidy out of an actual production cost of N112 for Enugu State.
He noted, “We calculated a cost-reflective tariff based on the assumption that the federal government will continue subsidizing power generation.”
FOCPEN Throws Its Support Behind EERC
The move by Enugu State has drawn backing from other states. The Forum of Commissioners of Power and Energy in Nigeria (FOCPEN) expressed solidarity with EERC’s decision.
FOCPEN leaders, Prince Eka Williams of Cross River and Omale Omale of Benue, stated that Enugu’s move aligns fully with the 1999 Constitution, the Electricity Act 2023, and relevant state laws.
They emphasized that state regulators have the legal backing to determine fair electricity tariffs that balance consumer protection with investor interests.
They also clarified that the tariff review process was rigorous, involving a detailed assessment of MainPower’s capital and operational expenditures as well as their regulatory asset base and customer classifications.
Anticipation Among Consumers Spurs Confusion
Across Nigeria, consumers are reacting to the anticipated drop in electricity prices. Many with prepaid meters are limiting their purchases, hoping to benefit from lower tariffs in August, while those on estimated billing are refusing to settle their current bills.
One such consumer, Rafiu Adepoju, a cobbler in Agege, Lagos, shared, “I only bought N5,000 electricity this week. I heard the price is going down soon.”
Despite being reminded that the new tariffs apply solely to Enugu, Rafiu insisted that Ikeja Electric would follow suit based on a yet-unconfirmed memo from the Lagos State Electricity Regulatory Commission (LERC).
Business Hallmark investigations revealed that these claims were not substantiated.
National Electricity Stakeholders Push Back
Major operators and regulators have rejected the idea of each state setting its own pricing, warning that it could severely destabilize the electricity market.
The Association of Nigerian Electricity Distributors (ANED) said that Enugu’s independent action has led to increased pressure on other distribution companies to cut their prices as well.
ANED’s CEO, Sunday Oduntan, explained that many customers across Nigeria are threatening to stop paying bills, expecting similar tariff reductions.
Oduntan criticized the EERC for issuing the order without consulting with NERC or the wider industry. He warned that such disjointed policies could reduce payment remittances to the national grid and affect power generation companies (GenCos) and other stakeholders.
Power Generators Reject EERC Tariff Model
Echoing ANED’s stance, the Association of Power Generation Companies (APGC), led by Joy Ogaji, denounced the tariff cut, stating that it’s based on flawed financial projections.
Ogaji cautioned that if states continue to follow EERC’s lead, it could threaten national energy sustainability.
She questioned whether Enugu expects the federal government to continue subsidizing its electricity or if it plans to independently manage accumulated sector debts and liabilities.
NERC Warns States to Respect Wholesale Cost Realities
NERC has issued a strong warning, stressing that states do not have the legal mandate to regulate power stations operating under federal licenses or interfere with national grid dynamics.
The commission insisted that any deviation from wholesale pricing structures must be matched with adequate subsidies from the state to avoid destabilizing the electricity market.
NERC cited Order No. EERC/2025/003 and criticized the reduction of Band A customer tariffs to N160.4/kWh, highlighting a risky assumption that N66.85/kWh of the cost will be subsidized.
Citing Section 34(1) of the Electricity Act, NERC reminded stakeholders of their statutory obligation to promote a stable and viable electricity market, urging sub-national regulators not to make unilateral decisions that jeopardize market stability.
Energy Experts Call for Caution and Unity
Professor Dayo Ayoade of the University of Lagos advised both the federal and state governments to work collaboratively during this transitional phase. He warned that investor confidence could erode if regulators take conflicting approaches.
He urged subnational regulators to create investor-friendly environments and called for federal intervention mechanisms to maintain harmony within the sector.
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