TCN MD removal threatens power reforms, $1.66bn foreign funding — Forum

.Seeks advice on Transmission Service Provider, Independent System Operator

By Udeme Akpan

THE Nigerian Electricity Regulatory Commission (NERC) yesterday, began actions targeted at unbundling the operations of the Transmission Company of Nigeria (TCN), into transmission and operations, which are to be provided by the Transmission Service Provider (TSP) and Independent System Operator (ISO).

The Commission had previously issued TSP and System Operations (SO) licenses to TCN in accordance with the nation’s Electric Power Sector Reform Act.

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While TCN would continue to play its transmission role, operations would be transferred to an ISO on terms to be determined by NERC.
According to the Commission, the action is lawful, as the Electric Power Sector Act, had already provided that the holder of the license for the two distinct regulated functions (TCN) may transfer the system operations function to an ISO on such terms and conditions to be decided by NERC.
In its ‘’Consultation Paper on Greater Independence of the Electricity System Operator,’’ obtained by Vanguard, NERC stated: “The Electric Power Sector Reform Act provides for the licensing of the successor transmission company initially charged with responsibility for the building and maintaining the physical national transmission network (often referred to as the “wire business” or Transmission Service Provider – TSP) and the system operations function.

“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 (Transmission Company of Nigeria Plc) may transfer the system operations function to an Independent System Operator (ISO), on such terms and conditions to be decided by the Nigerian Electricity Regulatory Commission (NERC).

“With the gradual transition to a contract-based electricity market whereby market participants are expected to be held accountable for their obligations under the industry contracts, the recent tariff orders issued by the Commission and performance standards contained therein indicate an imperative to consider granting greater independence for the systems operator, including the functional unbundling of the Transmission Company of Nigeria Plc into TSP and the ISO.”

Continuing, the Commission, stated: “This consultation document is seeking for stakeholders’ input in advising the Commission on the (i) readiness of the electricity industry for the unbundling of the SO function to an independent system operator taking into consideration the stage of market development and the key technical prerequisites for an efficient ISO; (ii) recommend the degree of independence that may currently be granted to the systems operator without causing disruptions in market stability; (iii) Where the unbundling of the ISO function is considered appropriate, recommend a possible ownership model and governance structure; and (iv) Where the unbundling of the ISO function is considered premature, propose possible conditions precedent and timelines for a transition.

“The Nigerian Electricity Regulatory Commission (NERC), under the provisions of the EPSRA 2004, has several objectives that include the creation and promotion of efficient market structures, ensuring the optimal utilisation of resources maximise access to ensure adequate and secure supply of reliable electricity. NERC is further required to undertake such activities as are necessary or convenient for giving effect to these objectives, including the promotion of competition and private sector participation, establishment of appropriate operating codes and standards, issuance of operating licenses and monitoring the operation of the electricity market.”

It added: “Pursuant to the provisions of sections 32(2)(d), 65 and 66 of the EPSR Act, the Commission issued Transmission Service Provider (TSP) and System Operations (SO) licenses to the Transmission Company of Nigeria Plc (TCN), as part of the transition of the electricity industry to compliance with the licensing requirements of the Act and economic regulation.

The role of the System Operator provided under Section 66 (1) of the EPSRA are: (a) Generation scheduling, commitment & dispatch; (b) Transmission scheduling and generation outage coordination; (c) Transmission congestion management; (d) International transmission coordination; (e) Procurement and scheduling of ancillary services and system planning for long term capacity; (f) Administration of the wholesale electricity market including the activity of administration of settlement payments, in accordance with the market rules; and (g) Such other activities as may be required for reliable and effective system operations.”
However, NERC called on the public to provide wise counsel on the implementation of the plan.

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