NERC to unbundle Transmission Company of Nigeria to two firms

The Nigerian Electricity Regulatory Commission (NERC) is consulting stakeholders as it plans to unbundle the Transmission Company of Nigeria (TCN) into two entities.

The TCN was left under the ownership and management of the Federal Government after the power sector was privatised in 2013 and the generation and distribution companies handed over to private investors.

The TCN has remained so since then, although operating under some strategic departments, amongst which include two key components known as the Transmission Service Provider and the System Operator.

The NERC revealed its plans to fully unbundle the transmission firm in a consultation document dated June 2020, with reference NERC/CP/2020/01.

It, however, called on stakeholders to make inputs as regards the move.

In the document, which was entitled, “Towards greater independence for the electricity System Operator,” the NERC explained that the Electric Power Sector Reform Act provided for the licensing of the successor transmission company.

It said the transmission company was initially charged with the responsibility for building and maintaining the physical national transmission network and the system operations function.

It observed that the national transmission network was often referred to as the “wire business” or “Transmission Service Provider.”

“It is envisaged that at a time when the electricity industry is substantially privatised, the Act provides that the holder of the license for the two distinct regulated functions (TCN Plc) may transfer the system operations function to an Independent System Operator,” the NERC stated.

It noted that the transfer would be on such terms and conditions to be decided by the commission.

It explained that there had been a gradual transition to a contract-based electricity market where participants were expected to be held accountable for their obligations under the industry contracts.

It further noted that based on the recent tariff orders issued by the commission and performance standards contained therein, it was therefore imperative to consider granting greater independence for the systems operator.

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This, it said, includes the functional unbundling of the Transmission Company of Nigeria Plc into Transmission Service Provider and Independent System Operator.

Based on this, the commission said the consultation document was made available to seek stakeholders inputs.

It said their inputs would be to advise the commission on the readiness of the electricity industry for the unbundling of the SO function to an independent system operator.

The NERC noted that this would be done by taking into consideration the stage of market development and the key technical prerequisites for an efficient ISO.

The commission requested stakeholders to recommend the degree of independence that could be granted to the systems operator without causing disruptions in market stability.