24 April 2014, Abuja – The Nigerian Electricity Regulatory Commission (NERC) has approved and signed into law, the rules for the interim period between completion of privatisation and the start of the Transitional Electricity Market (TEM).
The order which was signed by its Chairman and Chief Executive, Dr. Sam Amadi provides for regulation which shall apply to energy produced and delivered as well as associatd services during the interim period.
According to a statement yesterday, the rules are in exercise of the powers conferred on the NERC by section 96 of the Electric Power Sector Reform Act (2005).
NERC added that the Interim Rules are intended to cover all electricity taken from the transmission system by the distribution companies (DISCOs) with adjustment made to account for any bilateral arrangements between generation companies (GENCOs) and distribution companies (DISCOs).
The statement noted that existing arrangements shall be maintained to the extent that they are modified by the order of the Commission.
It added that the objectives of the rules are to establish a framework to govern trading arrangements during the Interim period when Power Purchase Agreements (PPAs) between the privatised Power Holding Company of Nigeria (PHCN) successor generation companies and Nigerian Bulk Electricity Trading Plc (NBET) and Vesting Contracts between NBET and the privatised PHCN successor distribution companies will not be effective.
The commission also said that it is to manage the probable revenue shortfall in the industry by determining the revenue allowable to participants and service providers during the interim period.
According to the statement: “The objectives also include the establishment of payment arrangements and flow of funds from DISCOs through the market operator to all beneficiaries and to establish the sources of funds required to ameliorate the probable shortfall in the revenues collected by the DISCOs during the interim period.
“The market operator shall ensure the DISCOs with invoices for their allocation of energy delivered and available capacity regulatory charges and services provided in each month during the interim period.
“In the event of disputes arising during the period between participants and service providers, it shall be resolved in accordance with the disputes resolution provision of the market rules.
“Also in this same vein, the Commission has under the powers conferred upon it by section 96 of the EPSR Act 2005 approved the Enforcement Regulation for the Nigerian Electricity Supply Industry.”