Power Showdown in Nigeria 2025: Enugu’s EERC vs NERC – Who Regulates and Who Foots the Bill?

The recent tug-of-war between Nigeria‘s national electricity regulator (NERC) and the Enugu State Electricity Regulatory Commission (EERC) marks a dramatic shift in the country’s power governance. At its core are two pressing questions: who gets to set tariffs, and who ultimately bears the cost?

Decentralization in Action

Under the Electricity Act of 2023, Nigeria adopted a hybrid regulatory structure granting states a measure of autonomy over their electricity markets. Enugu seized that opening, becoming the first state to formally request and receive tariff-setting powers from NERC. The formal transfer began on May 1, 2024, and reached full implementation by October 22, 2024, granting EERC exclusive jurisdiction to define end-user electricity prices within the state.

This devolution is not absolute: NERC still holds authority over interstate generation, transmission, and wholesale transactions. Electricity sourced from the national grid must adhere to terms approved by NERC, even if EERC determines the final consumer tariff.

The Subsidy Dilemma: Who Pays the Price?

Enugu’s bold move to reduce tariffs from ₦209.50 to ₦160.40 per kWh, well below the NERC-approved cost of ₦112.60 per kWh to DisCos, triggered alarm at the federal level. The underlying concern: a growing federal subsidy vault already exceeding ₦4 trillion to compensate for sector shortfalls stemming from theft, billing inefficiencies, and transmission losses.

With Enugu absorbing power from the national grid, the gap between cost and collection widens. Unless Enugu underwrites the shortfall or NERC backs off, the move threatens to deepen federal liabilities—and shift the financial burden onto other states or ratepayers.

Legal Complexities: Can ‘Distribution’ Include Tariff-Setting?

The crux of the legal debate centers on the constitutional interpretation of “distribution.” While Enugu asserts that this term empowers it to adjust tariffs, legal texts define distribution as physical delivery, from substation to consumer, not an all-encompassing license to modulate prices.

The Electricity Act of 2023 also separates infrastructure ownership from billing. DisCos might eventually split into “distribution-only” and “supply-only” entities, a nuance that challenges the notion that end-user pricing stems solely from distribution authority.

Ripple Effects: Market Reactions and Redistribution Risks

Enugu’s tariff cuts immediately triggered financial strain. MainPower, the state’s DisCo, saw its supply allocation drop by 50%, creating a ₦1 billion monthly funding gap. Since neighboring states are still operating with higher tariffs, supply may be redirected there to minimize collective losses.

This tug dramatically illustrates how local decisions can disrupt national supply dynamics. It also raises uncomfortable questions: will other states emulate Enugu? Who steps in to fill the subsidy vacuum when national grid costs are not fully met?

Looking Ahead: Reform or Re-Conflict?

The move to decentralize regulation aims to foster responsiveness and efficiency. A state attuned to local demands might better streamline distribution or experiment with mini-grids and renewables. Preliminary developments, like Enugu’s licensing of MainPower and Fedikore’s 10MW IPP, underscore this potential.

But without alignment on cost recovery, transparency, and subsidies, the model risks devolving into fiscal chaos. If more states reduce tariffs below cost, the federal government may find its fiscal heft on life support, while federal-state grid operations become fragmented and inefficient.

Final Thoughts

Enugu’s assertion of regulatory independence reflects a bold attempt to reshape Nigeria’s electricity sector. While devolution promises localized clarity, it’s overshadowed by unresolved systemic issues—chiefly funding gaps and legal ambiguity over tariff authority.

The future of Nigeria’s power sector depends on negotiated balance. Policymakers must establish clear frameworks for cost recovery, define the division of tariff-setting authority, and guard against subsidy-driven imbalance. Without that foundation, even the most well-intentioned reform may re-ignite tensions it hoped to resolve.

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