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NERC LICENSING AND REGULATORY FRAMEWORK

NERC LICENSING AND REGULATORY FRAMEWORK. Dr. Steven Andzenge, MON Commissioner Legal, Licensing & Enforcement, NERC Abuja, 29 th November, 2011. OUTLINE. The licensing and regulatory philosophy Requirement for licensing and the procedure The procedure The format The fees

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NERC LICENSING AND REGULATORY FRAMEWORK

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  1. NERC LICENSING AND REGULATORY FRAMEWORK Dr. Steven Andzenge, MON Commissioner Legal, Licensing & Enforcement, NERC Abuja, 29th November, 2011

  2. OUTLINE • The licensing and regulatory philosophy • Requirement for licensing and the procedure • The procedure • The format • The fees • The duration, extension & renewal • The licensing status of the Successor Companies • Salient terms and conditions • Conclusion

  3. The licensing and regulatory philosophy • Sector 32(1)(f) EPSRA requires NERC to ensure regulation is fair and balanced for licensees, consumers, investors, and other stakeholders

  4. Statutory Requirement for Licensing • Section 62 makes it mandatory to licence except captive and less than 1MW • NERC is empowered to make regulations on application for licenses • The procedure is stipulated in Nigerian Electricity Regulatory Commission Application for Licenses (Generation, Transmission, System Operations, Distribution & Trading) Regulations, 2010. • This entails formal application in a prescribed format and payment of application fee • Requirement are corporate/legal requirements, technical and commercial requirements

  5. Statutory Requirement for Licensing (Cont) • The law gives 6 month within which an application must be granted or refused • Application is evaluated within the 3 divisions in NERC • License is issued upon fulfillment of conditions and upon payment of all necessary license fees.

  6. The PHCN Successor Companies • PHCN was unbundled by Section 8 of the EPSR Act • By Section 23(1) were granted interim licenses on July 1, 2006 after which they were granted full licenses on January 1, 2010 upon payment of license fees • License is for 10 years duration can be extended and renewed giving total of 25 years. • NERC has issued letters of comfort in respect of the privatization exercise.

  7. Terms and Conditions • Terms and Conditions include: • Payment of operation fees: • Generation- 1.5% of Tariff Charge/kWh • Distribution- 1.5 of licensee’s charges/kWh net the cost of generation and transmission • Transmission- 1.5% of Tariff Charge/kWh • Compliance with reporting obligations requirements as contained in the Nigerian Electricity Regulatory Commission Reporting Compliance Regulations 2009 • Supplementary activities must be with NERC’s approval. This is to ensure that supplementary activities do not materially compromise the financial integrity of the licensee • Assignment/transfer of licensed business must be with the consent of the Commission.

  8. Terms and Conditions • Disposal of relevant assets must be with the consent of the Commission. • Change in control must be with prior approval of the Commission. • 30 days notice required for changes in ownership exceeding 5% • Any increase in issued share capital • Enforcement • Commission has powers to enforce and impose sanctions • Power to suspend and revoke licenses

  9. Discos • Required to: • Comply with Distribution Code • Comply with Commission’s tariff and charges • Develop and maintain a distribution system • Customer metering • Promote efficient energy use through sensitization of consumer. • Have a dedicated compliance/regulatory department committed to compliance issues. • Maintain good regulatory standing.

  10. Transmission • Obligation to offer connection to all • Compliance with transmission standards • Ensure operations are in a accordance with the Act and conditions of the Commission’s licenses. • Comply with Codes and Rules

  11. Other Regulatory Steps of the Commission Regulation are being developed in the following areas: • Independent Electricity Distribution Network; • Acquisition of land and access right for power projects in Nigeria; and • Independent Electricity Transmission Network. • Embedded Generation • Development of an enforcement frame work. • Development of dispute resolution mechanism for operators and consumers. • Details of all regulations by the Commission on our website www.nercng.org

  12. Conclusion • The Licensing Philosophy requires NERC to ensure regulation is fair and balanced for licensees, consumers, investors, and other stakeholders. • The Commission is committed to a well regulated NESI

  13. THANK YOU Dr. Steven Andzenge, MON Commissioner, Legal, Licensing and Enforcement Nigerian Electricity Regulatory Commission E-mail: sandzenge@nercng.org Website: www.nercng.org

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