Section 116 Electricity Act 2023
Section 116 of the Electricity Act 2023 is about Activities subject to tariff regulation. It is under Part XI (Tariffs and Subsidies) of the Act.
(1) The following activities in the NEST are subject to tariff regulation —
(a) generation and trading, in respect of which licenses are required under this Act and where the Commission considers regulation of prices necessary to prevent abuses of market power;
(b) transmission, distribution, supply and system operation, in respect of which licenses are required under this Act; and
(c) electricity distribution franchising or other activity that the Commission may determine as being subject to tariff regulation.
(2) Prices for the activities referred to in subsection (1) shall be regulated according to one or more methodologies adopted by the Commission for regulating electricity prices and such tariff methodologies shall —
(a) allow a licensee that operates efficiently to recover the full costs of its business activities, including a reasonable return on the capital invested in the business;
(b) provide incentives for the continued improvement of the technical and economic efficiency with which the services are provided;
(c) provide incentives for the continued improvement of quality of services;
(d) give to consumers economically efficient signals regarding the costs that their consumption imposes on the licensee’s business;
(e) avoid undue discrimination between consumers and consumer categories;
(f) phase out or substantially reduce cross subsidies over a time frame specified by the Commission; and
(g) promote co-generation, and generation of electricity from renewable sources.
(3) The Commission shall take into account any subsidy provided by the Power Consumer Assistance Fund under this Act or from any other source, whether direct or by way of favourable financing terms, or in any other manner, in establishing its tariff methodologies.
(4) Notwithstanding subsection 2 (e), the Commission shall have the authority to —
(a) approve any willing-buyer, willing-seller ring-fenced arrangement that allows distribution and or supply licensees to enter into bilateral contracts to offer premium service to a class or classes of customer and rely on the provisions of sues contracts to offer premium service to a class or classes of customers at different tariff other than the approved tariff methodology; and
(b) establish tariff methodologies that reflect the terms and conditions of a contract between licensees or between a licensee and one or mote eligible customers.
(5) Notwithstanding subsection (2) (e), in establishing tariff methodologies, the Commission may differentiate among consumers on the basis of differences in total electricity consumption, the time periods on which electricity is consumed, load factors, power factors, voltage levels, location within the country and other such criteria as may affect the cost of providing a service and may allow a lifeline tariff for some consumers,
(6) Prior to approving a tariff methodology, the Commission shall give notice in the Federal Government Gazette, and in one or more newspapers with wide circulation, of the proposed establishment of a tariff methodology, indicating the period within which objections or representations in connection with the same may be made to the Commission.
(7) In preparing a tariff methodology, the Commission shall —
(a) consider any representations made by license applicants, other licensees, consumers, eligible customers, consumer associations, associations of eligible customers and such other persons as it considers necessary or
desirable;
(b) issue a notice to license applicants, other licensees, consumers, eligible customers, consumer associations, associations of eligible customers and such other persons as it considers necessary to submit their inputs and
such notice shall be given not later than 30 days or such a timeframe as the Commission may consider to be reasonable to allow all the necessary parties make representations to the proposed tariff methodology; and
(c) obtain evidence, information, or advice from any person who, in the Commission’s opinion, possesses expert knowledge which is relevant in the preparation of the methodology.
(8) The Commission shall fix the date on which the tariff methodology shall come into operation and it shall cause notice to be given in the Federal Government Gazette of that date.
(9) If it appears to the Commission that a tariff methodology should be changed, the Commission shall give notice in the Federal Government Gazette, and in one or more newspapers with wide circulation, of the proposal to change the methodology, indicating the period within which representations in connection with the proposal may be made.
(10) After considering any objections of representations received in response to a notice issued under subsection (9), the Commission may confirm the proposed changes to the tariff methodology and the provisions of subsection (7) shall apply mutatis mutandis.
(11) Every person on whom any function has been conferred or imposed in connection with setting tariff’s, shall be bound by a tariff methodology that has come into operation under subsection (8) or (10).
(12) Every licensee shall keep at his office a current copy of the tariff methodology applicable to that licensee and shall make a copy available for inspection on request by any person free of any charge during the licensee’s normal working hours.
(13) Any fines or penalties levied against a licensee in terms of this Act or any other law or regulation shall not be rechargeable to the licensee’s customers.
(14) Any person or licensee who contravenes or condones the contravention of the provision of subsection (13), commits an offence and is liable to a fine two times the charge to the licensee’s customers or imprisonment for a term not more than one year or both.
