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Transaction and Industry Review Conference Dr. Sam Amadi Chairman, Nigerian Electricity Regulatory Commission 28 th November 2011.

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Presentation on theme: "Transaction and Industry Review Conference Dr. Sam Amadi Chairman, Nigerian Electricity Regulatory Commission 28 th November 2011."— Presentation transcript:

1 Transaction and Industry Review Conference Dr. Sam Amadi Chairman, Nigerian Electricity Regulatory Commission 28 th November 2011

2 Table of Contents 2 Tariff Principles MYTO Methodology MYTO II Model Structure

3 Tariff Principles MYTO sets tariffs for the three electricity sectors based on certain principles and assumptions, namely: – Cost recovery/financial viability – licensees recover efficient costs, including a reasonable return on capital – Signals for investment – tariffs should encourage an efficient level and nature of investment (e.g., location) – Certainty and stability of the tariff framework enables private sector investment – Efficient use of the network – tariffs should reflect the marginal costs that users impose on the system, influence efficient use and reduce cross-subsidies – Allocation of risk – the tariff framework should allocate risks efficiently to those best placed to manage them 3

4 Tariff Principles – Simplicity and cost-effectiveness – the framework should be simple and not costly to implement – Incentives for improving performance – it should incentivise cost reduction and quality of service – Transparency/fairness – it should be transparent and ensure open access to monopoly networks – Flexibility/robustness – it should cater to unforeseen changes in the market – Social and political objectives – it should provide for the achievement of social goals such as universal access and demand-side management 4

5 MYTO Methodology- From General Assumptions to Disco Retail Tariff Distribution & retail tariff Building Blocks Final retail tariff To consumers Distribution & retail tariff Building Blocks Inputs to the tariff – forecasts of load, capacity, fuel costs, investment, levels of losses, customer numbers, O & M costs and other economic and technical data Generation costs, life cycle cost life cycle cost methodology methodology Transmission tariff Building Blocks Distribution & retail tariff Building Blocks Final retail tariff To consumers 5

6 MYTO II Model Structure Load Calculations Investor Module (IPP) Tariff Summary (End-user Tariff) BT Charges Generation New Entrant Model Generation Wholesale Prices Investor Module (DISCO) Control Regulatory fee Transmission Tariffs INPUT COMPUTATION OUTPUT Transmission Depreciation Transmission Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution Costs (11) Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution Depreciation (11) Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution–11 Costs Distribution Tariffs (11) Data / Assumptions Generation, Transmission & Distribution Load Forecast

7 CompanyFair Values (N000) Abuja Disco 55,166,801, Benin Disco 44,392,977, Eko Disco 55,742,985,576.66* Enugu Disco 44,724,247, Ibadan Disco 58,343,210, Ikeja Disco 73,889,325,642.56* Jos Disco 32,111,457, Kaduna Disco 51,133,316,916.91* Kano Disco 56,319,019,893.70* Port-Harcourt Disco 41,361,539, Yola Disco 19,692,038, Asset Valuations

8 8 Regulated costs (N '000) Total Generation326,629,494461,297,088650,085,498788,237,416 Total Transmission46,405,79562,521,17278,482,95896,057,671 Total Distribution233,240,333264,282,475296,040,852329,767,831 Total 606,275,622788,100,7351,024,609,3081,214,062,918 Regulated Tariff Average tariff (NGN/MWh) (Pre- Subsidy)24,07322,71723,17223,917 Revenue Requirements

9 Tariff Schedule Tariff Code Fixed N/month % Increase Energy N/Kwh % Increase Residential R % Residential R % % Residential R3 12, , % % Residential R4 78, , % % Commercial C % % Commercial C2 11, , % % Commercial C3 70, , % % Industrial D % % Industrial D2 69, , % % Industrial D3 70, , % % Special % % Special 2 31, , % % Special 3 31, , % % Street Lightng S % % (Post-Subsidy)

10 Contact us at: Adamawa Plaza, Plot 1099 First Avenue, Off Shehu Shagari Way, Central Business District, Abuja THANK YOU Website: 10


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