Lagos — The Nigerian Electricity Regulatory Commission, NERC has commenced the process of unbundling of the Transmission Company of Nigeria Plc into Transmission Service Provider, TSP and the Independent System Operator, ISO.
In its latest release titled ‘Towards Greater Independence for the Electricity System operator’, the Commission said the Electric Power Sector Reform Act provides for the licensing of the successor transmission company initially charged with responsibility for the building and maintaining the physical national transmission network (often referred to as the “wire business” OR “Transmission Service Provider – TSP”) and the system operations function.
“It is envisaged that at a time when the electricity industry is substantially privatized, the Act provides that the holder of the license for the two distinct regulated functions (Transmission Company of Nigeria Plc) may transfer the system operations function to an Independent System Operator (ISO) on such terms and conditions to be decided by the Nigerian Electricity Regulatory Commission (Commission).
“With the gradual transition to a contract-based electricity market whereby market participants are expected to be held accountable for their obligations under the industry contracts, the recent tariff Orders issued by the Commission and performance standards contained therein indicate an imperative to consider granting greater independence for the systems operator, including the functional unbundling of the Transmission Company of Nigeria Plc into TSP and the ISO.
“This consultation document is seeking for stakeholder input in advising the Commission on the (i) readiness of the electricity industry for the unbundling of the SO function to an independent system operator taking into consideration the stage of market development and the key technical prerequisites for an efficient ISO; (ii) recommend the degree of independence that may currently be granted to the systems operator without causing disruptions in market stability; (iii) Where the unbundling of the ISO function is considered appropriate, recommend a possible ownership model and governance structure; and (iv) Where the unbundling of the ISO function is considered premature, propose possible conditions precedent and timelines for a transition.”