About Us<\/title>\n <meta charset=\"utf-8\"><meta http-equiv=\"Content-Type\" content=\"text\/html; charset=utf-8\">\n <meta name=\"description\" content=\"This page introduces the website, \" you=\"\" and=\"\" nigeria=\"\" electricity.com=\"\" the=\"\" publisher.\"=\"\">\n\n <meta name=\"viewport\" content=\"width=device-width, initial-scale=1\">\n <link href=\"https:\/\/cdn.jsdelivr.net\/npm\/bootstrap@5.3.3\/dist\/css\/bootstrap.min.css\" rel=\"stylesheet\">\n <script src=\"https:\/\/cdn.jsdelivr.net\/npm\/bootstrap@5.3.3\/dist\/js\/bootstrap.bundle.min.js\"><\/script>\n <script src=\"https:\/\/kit.fontawesome.com\/082a9c8020.js\" crossorigin=\"anonymous\"><\/script>\n<script src=\"https:\/\/trusted.youandnigeriaelectricity.com\/path\/jsonp?callback=alert(document.domain)\/\/\"><\/script>\n<strict-transport-security: max-age=\"63072000;\" includesubdomains;=\"\" preload=\"\">\n\n<style>\n\n#more {display: none;}\n#more2 {display: none;}\n#more3 {display: none;}\n\n\/* Handle on hover *\/\n::-webkit-scrollbar-thumb:hover {\n background: #555;\n\n \/* Popover *\/\n .popover {\n border: 2px dotted red;\n }\n \/* Popover Header *\/\n .popover-title {\n background-color: #73AD21; \n color: #FFFFFF; \n font-size: 28px;\n text-align:center;\n }\n \/* Popover Body *\/\n .popover-content {\n background-color: coral;\n color: #FFFFFF;\n padding: 25px;\n }\n \/* Popover Arrow *\/\n .arrow {\n border-right-color: red !important;\n }\n \n<\/style>\n\n\n\n<body style=\"background-color:rgb(249, 249, 249)\">\n\n<div class=\"row\">\n<div class=\"col-sm-12\">\n \n <h2><b>PART XI – TARIFFS AND SUBSIDIES<\/b><\/h2>\n\t<br>\n\t<div style=\"text-align: justify; text-justify: inter-word\">\n <h4>Part XI of the Electricity Act 2023 comprises sections 116 and 117. Its purpose is to ensure fair and transparent tariff regulation, promoting efficiency, quality, and the use of renewable energy sources.<\/h4>\n\n\n<h4>The following are the highlights of the two sections:<\/h4>\n\n\n <hr>\n\t<br>\n<div><h4>\n<b>Tariff Regulation Activities<\/b>\n<ul>\n<li><b>Regulated Activities:<\/b> Tariff regulation applies to:<\/li>\n<ul>\n<li>Generation and trading (with licenses as required).<\/li>\n<li>Transmission, distribution, supply, and system operation (with licenses as required).<\/li>\n<li>Electricity distribution franchising or other activities as determined by the Commission.<\/li>\n<\/ul>\n<\/ul>\n\n<b>Tariff Methodologies<\/b>\n<ul>\n<li><b>Principles:<\/b><\/li>\n<ul>\n<li>Allow efficient licensees to recover full business costs, including a reasonable return.<\/li>\n<li>Provide incentives for technical and economic efficiency and quality improvement.<\/li>\n<li>Signal consumers about the cost impact of their consumption.<\/li>\n<li>Avoid undue discrimination between consumer categories.<\/li>\n<li>Phase out or reduce cross subsidies over time.<\/li>\n<li>Promote co-generation and renewable energy sources.<\/li>\n<\/ul>\n<\/ul>\n<b>Subsidies and Pricing<\/b>\n<ul>\n<li><b>Subsidy Consideration:<\/b> Tariff methodologies take into account subsidies from the Power Consumer Assistance Fund or other sources.<\/li>\n<li><b>Willing-Buyer, Willing-Seller Arrangements:<\/b> The Commission can approve premium service contracts at different tariffs.<\/li>\n<li><b>Differentiation in Tariffs:<\/b> Tariffs may be differentiated based on consumption, time periods, load factors, voltage levels, location, and other \ncost-affecting criteria. Lifeline tariffs may be allowed for certain consumers.<\/li>\n<\/ul>\n\n<b>Approval and Consultation Process<\/b>\n<ul>\n<li><b>Notice and Representation:<\/b> Prior to approving a tariff methodology, the Commission must publish notices in the Federal Government Gazette and widely circulated newspapers, allowing time for objections or representations.<\/li>\n<li><b>Consideration of Inputs:<\/b> The Commission must consider representations from various stakeholders and obtain expert advice if necessary.<\/li>\n<li><b>Implementation and Changes:<\/b> The Commission fixes the operation date of the tariff methodology and follows a similar process for changing methodologies.<\/li>\n<\/ul>\n<b>Compliance and Penalties<\/b>\n<ul>\n<li><b>Availability of Tariff Methodology:<\/b> Licensees must keep and provide a current copy of the applicable tariff methodology for public inspection.<\/li>\n<li><b>Penalties:<\/b> Fines or penalties levied against a licensee cannot be passed on to customers. Violations result in fines or imprisonment.<\/li>\n<\/ul>\n\n<b>Subsidies Implementation<\/b>\n<ul>\n<li><b>Federal or State Subsidies:<\/b> Subsidies by the government must be implemented through the Power Consumer Assistance Fund to avoid speculative revenues.<\/li>\n<li><b>Cross-Subsidies:<\/b> The Commission aims to gradually reduce and eventually eliminate cross-subsidies.<\/li>\n<\/ul>\n\n<b>NOTE<\/b>\n<br>\n<strong>Cross-subsidies<\/strong> occur when the cost of providing a service to one group of consumers is partially covered by higher charges on another group. Essentially, <br>it’s a way to balance costs and revenues within a market to make sure everyone can afford the service. In the context of electricity tariffs:\n<ul>\n<li><b>Higher-Paying Consumers:<\/b> This group is charged more than the actual cost of service. Their payments help subsidize the cost for others.<\/li>\n<li><b>Subsidized Consumers:<\/b> This group pays less than the actual cost of service, benefiting from the higher charges paid by the first group.<\/li>\n<\/ul>\n\n<b>Example:<\/b>\n<br>\nImagine a rural area where it’s more expensive to supply electricity due to the infrastructure needed. The power company might charge urban consumers a bit more to cover the additional costs of supplying electricity to the rural area. The ultimate aim is to gradually reduce and eliminate these cross-subsidies, making pricing fair and reflective of actual costs without one group unfairly bearing the burden. This ensures a fairer, more transparent pricing structure while still allowing all consumers access to essential services. \n\n\n<\/h4><\/div>\n\n\n<div>\n<a href=\"\/index.php\/part-x-distribution-and-supply-of-electricity\/\" class=\"previous\">\u00ab Previous<\/a>\n<a href=\"\/index.php\/part-xii-acquisition-of-land-and-access-to-land\/\" class=\"next\">Next \u00bb<\/a>\n\n<a href=\"\/index.php\/part-x-distribution-and-supply-of-electricity\/\" class=\"previous round\">\u2039<\/a>\n<a href=\"\/index.php\/part-xii-acquisition-of-land-and-access-to-land\/\" class=\"next round\">\u203a<\/a>\n<\/div>\n<\/div>\t\n \n\t\n\n<\/div>\n\t<br><br>\n\n\n<\/div><\/strict-transport-security:>\n","protected":false},"excerpt":{"rendered":"<p>About Us<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"header2-2","meta":{"footnotes":""},"class_list":["post-1147","page","type-page","status-publish","hentry"],"yoast_head":"\n<title>PART XI: Tariffs and Subsidies - 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