REVIEW OF NIGERIAN ELECTRICITY REGULATORY COMMISSION’S GUIDELINES FOR SECONDARY ESCROW ACCOUNT MANAGEMENT FOR BILATERAL TRANSACTIONS BY ELECTRICITY DISTRIBUTION LICENSEES

The payment waterfall set out in the Multi-Year Tariff Order 2022 (MYTO 2022) and the Principal Collection Account (PCA) set up and managed by the NESI Stabilization Securities LTD (NESI-SSL) into which all revenues received by distribution companies (DisCos) must be paid and disbursed have made direct contracting between DisCos and generation companies (GenCos), as well as investment in the electricity distribution value chain by third parties problematic.

To deal with these concerns, NERC has issued the Guidelines for Secondary Escrow Account Management for Bilateral Transactions by Electricity Distribution Licensees (the Guidelines) which provides an arrangement by which DisCos may directly enter bilateral transactions with trading partners and specially dedicated Secondary DisCo Account Escrow Arrangements (SDAs) are set up to administer the funds received by DisCos from the market with respect to these transactions.

In this newsletter, we discuss the Guidelines, critically examining its likely impact on scaling up DisCos’ revenue, the corresponding increase of investments in the networks, and the consequent reduction of ATC & C losses along the distribution value chain.

LEAVE A REPLY

Please enter your comment!
Please enter your name here