Politically speaking, it could be safe to say that the revolution in the power sector has begun with the transfer of regulatory duties by the Nigerian Electricity Regulatory Commission (NERC) to states’ regulatory commissions, which is a step in the right direction and in line with the recently signed Electricity Act 2023 that moved issues of electricity generation, transmission and distribution from the exclusive list to the concurrent list.

It was heart-warming to hear that NERC has transferred regulatory duties to Enugu, Ekiti and Ondo states regulatory authorities and it is expected that more states will quickly set up their electricity markets so as to take over the regulatory duties as these states have done.

NERC was created under the Federal Ministry of Power in 2005 under the Obasanjo administration through the EPSRA 2005 and saddled with the following functions: Issue licences and inspect private and corporate electric power projects 10MW and above , where 1- 10MW are issued Captive Licences; Determine operating codes and standards in the creation and use of electricity in Nigeria; Establish customer rights and obligations and set cost reflective industry tariffs; Impose penalties on companies that manipulate the electricity markets; Promotion of policies that are efficient and environmentally friendly.

In assessing the performance of NERC since its creation, the regulatory body has done well given the circumstances it found itself. It issued fresh licences to new Gencos; carried out minor and major tariff reviews; issued supplementary rules and orders and sanctioned some defaulting entities but its operations were generic and did not take into cognizance some peculiarities as they affect different locations on the national grid. It was like a one-size fits all organization.

This new development of transferring regulatory duties to states will definitely avail states the privilege to put their peculiarities into consideration when issuing rules and orders, which will promote better efficiency and reduce areas of conflicts.

Another benefit of states taking over regulatory functions within their jurisdictions is that it will enhance the engagement of more hands at states level in the power sector and is also capable of promoting synergy and cooperation between the federal and state regulators as well as between state and state regulators thus creating room for them to rub minds and share mutual experiences for the further development of the power sector in Nigeria.

This development will give states the opportunity to create and develop their own state electricity regulatory agency, which is capable of spreading knowledge in the area of electricity regulation to more stakeholders as against the previous centralized system that made electricity regulation an exclusive activity.    

The decentralization of the regulatory functions in the power sector will lead to healthy competition among state regulators as they will become more investor-friendly in their bid to woo genuine investors and attract Foreign Direct Investment (FDI) into their states for the development of the electricity sector and overall industrialization of their states thereby securing an improved quality of life for their citizens.