LASERC to take full regulatory responsibility for Eko and Ikeja Discos 

Following the Order on the transfer of Regulatory Oversight of Electricity Market in Lagos State, issued on 5th Decemer, 2024, by NERC, which created the transitional framework for the transfer of regulatory oversight from NERC to Lagos State Electricity Regulatory Commission (LASERC), NERC has formally notified Eko and Ikeja Discos of the formal transfer of regulatory oversight to LASERC effective 4th June 2025.

The Order had earlier mandated the Discos, in line with the law, to incorporate a subsidiary company to undertake electricity distribution activities within Lagos.

It was also mandated for the Discos to delineate their assets and liabilities to the new SubCos that have been created.

According to the notice issued by NERC, Section 230 (6) of the Electricity Act provides that “on the completion of the transfers under subsections (2) and (3), the Commission shall have no further regulatory responsibility whatsoever for electricity market activities carried on entirely within the state to which regulatory responsibilities has been transferred and for which the additional successor company has been incorporated and conferred with assets, liabilities, employees, rights and obligations”.

Recall further that other States like Enugu, Ekiti, Ondo, Imo, Oyo and others have also created their State Electricity Markets and are at various stages of market transition. 

The contemplation of the law is that when a State evinces the intention to set up its electricity market and establishes the required legal framework and regulatory institution, it will indeed exercise its full powers to determine how its market functions including the determination of electricity tariffs within the State. A key component of tariff within a State is whether full cost reflective tariffs shall be passed on to electricity consumers or whether the State government will cushion the impact of full cost reflective tariffs by implementing a subsidy regime. 

It is imperative to note that none of the States that have established their regulatory market has taking the bull by the horn in addressing the issue of Tariffs and power subsidy. Recall that the current annual subsidy exposure of the Federal Government is about N2 trillion. It is doubtful whether any States have the capacity to carry a subsidy burden at this time.  It is therefore not surprising that NERC has continued to issue the monthly supplementary MYTO orders even for DisCos in States that have set up their regulatory markets.

Lagos State has repeatedly assured stakeholders that tariffs shall be fully cost reflective within it’s market. It will be interesting to see how this is implemented considering the subsidy regime currently being operated within the national market framework. We expect the tariff status quo to remain for Lagos just like the other States.