TCN seeks electricity tariff increase to expand network

23 April 2015, Abuja – The Transmission Company of Nigeria has applied to the Nigerian Electricity Regulatory Commission to review its tariff upward.

Energy Crisis Threatens the Western Power GridsThe TCN, which is still under government ownership and control, is being managed by a private firm, Canada’s Manitoba Hydro International under a three-year contract.

NERC, in its consultation paper for the review of the TCN tariff under the multi-year tariff order methodology, said TCN claimed that a number of significant changes had taken place or were expected in 2015/16 since MYTO-2 tariffs were determined three years ago.

“Particularly, TCN claims that existing MYTO 2 tariffs and billing collections are inadequate for TCN to finance its operations; there is an urgent need to enable TCN to adequately grow the infrastructure in step with expected expansion of generation and load; to maintain and operate the network to higher standards; and that lack of maintenance of the network over the past two decades has adversely impacted on system reliability and delivery.”

According to the TCN, only 58 per cent of needed operating expenses in 2015 are covered by MYTO and this must be increased to bring the system up to standard and maintain it at a higher level, among other reasons.

“The TCN requests for the review of its cost components in three separate but interdependent departments – Transmission Service Provider, System

Operations and the Market Operations in the following areas: network/capital expenditure component; operation expenditures; and transmission losses.”

The TSP is responsible for providing electricity transmission services in a cost-effective, efficient and reliable way. It carries out different maintenance activities in addition to planning, designing, procuring and implementing transmission grid expansion programme.

According to the TSP, the existing transmission system, which is capable of delivering about 7,000 MW of generation to the distribution company Trading Points, is inadequate to meet expected growth with NIPP and various IPP generation projects coming online.

The country needs $2.2bn (N433bn) to expand the transmission network to 10,000 by 2017, according to the TSP capital expenditure.

It said the existing system could not support the anticipated growth in per capita usage and the expected substantial growth in customers in all classes, adding that if the system was not expanded, it would negatively impact the country’s potential to increase its GDP.

Accordingly, TSP needs to implement an ambitious programme of transmission improvements, with the primary targets being to increase the current capacity of the grid from 7,000MW at present to 10,000MW by 2017, and to 20,000MW by 2020.

“During 2015-16, TCN will focus mainly on refurbishing existing facilities to restore the network to its original capacity, finishing projects that are in various stages of construction, and initiating the construction of over 120 new lines and substations to expand the network to a total load carrying capability of 10,000 MW.”

For tariff calculations, TCN proposes that NERC establish allowable loss factors for each component of losses (technical, commercial and metering) to determine the allowable aggregate losses that are charged to market participants.

According to the paper, allowable technical and commercial losses are proposed to be charged to the Discos, while allowable metering losses are proposed to be charged to the market participant that is responsible for such losses.

NERC has now called on stakeholders to consider whether the commission should consider transmission losses in the manner proposed by TCN or maintain the status quo.

“This consultation paper aims at reviewing the TCN tariff for the year 2014 to 2015 to enable TCN to be able to meet its responsibilities in transmitting electricity across the country without constraints or impediments,” said NERC.

– Punch

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