As the nation gradually transiting to a contract-based electricity market, whereby market participants are expected to be held accountable for their obligations under the industry contracts, the Nigerian Electricity Regulatory Commission (NERC) said it has commenced the processes to unbundle Transmission Company of Nigeria (TCN) into Transmission ServiceProvider (TSP) and Independent System Operator (ISO).
In a consultation document obtained by Energy Times, titled towards greater independence for the electricity system operator, NERC said 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 TCN into TSP and the ISO.
The document noted that NERC under the provisions of the EPSRA 2004, 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.
“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 Actand economic regulation.
It noted that the holder of the SO license is expected to ensure neutrality and transparency in the management of the grid by strictly complying with the provisions of the Grid Code and the Market Rules as itaffectsall market participants.
The SO and TSP licenses are currently bundled under the auspices of the TCN and there are concerns from market participants in respect of possible conflicts of interest on matters that affect the TSP.
This consultation document is seeking for stakeholder 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 among others.
It however, asked industry stakeholders to submit comments to the commission in hard copies on or before August, 5, 2020.