ELECTRICITY ACT EMPOWERS GENERATION

President Tinubu has officially signed the Electricity Act 2023, granting states, private companies, and individuals the authority to generate, transmit, and distribute electricity throughout the nation. This new legislation marks a significant shift from the Electricity and Power Sector Reform Act of 2005, effectively ending the monopoly on electricity generation, transmission, and distribution at the national level.

The primary objective of the Electricity Act 2023, which was initially approved by lawmakers in July 2022, is to enable states to issue licenses to private investors for the operation of mini-grids and power plants within their respective regions. However, it should be noted that the Act does not permit interstate or transnational electricity distribution.

Under the Electricity Act 2023, the Nigerian Energy Regulatory Commission (NERC) assumes the role of governing the country's energy industry, while still respecting the states' authority to enact laws, establish electricity markets, and regulate those markets. The Act outlines the process by which NERC can delegate regulatory authority to state regulators once they are established. Until such regulations are implemented by the states, NERC will continue to regulate energy businesses solely within those states that lack specific electricity market regulations. However, NERC will retain jurisdiction over cross-border rules, regulating generation and transmission activities that span multiple states.

Furthermore, the Act empowers parliamentary committees, specifically the Senate and House Committees on Power, to exercise oversight and control over the Nigerian Electricity Supply Industry (NESI). This authority applies irrespective of any supervisory role held by government ministries over state-owned companies or other entities operating within the energy supply industry.

To promote renewable energy sources, the Electricity Act 2023 requires electricity generation licensees to fulfill renewable generation obligations. These obligations can be met by either producing power from renewable sources, purchasing renewable energy-generated power, or acquiring instruments representing renewable energy generation. Additionally, the Act mandates the imposition of renewable purchase obligations on distribution or supply licensees, further encouraging the adoption of renewable energy in the country.