LEGAL ANALYSIS ON ELECTRICITY SUPPLY BANDING AND CONSUMER PROTECTION IN NIGERIA

Abstract

This paper critically examines the Nigerian Electricity Regulatory Commission’s (NERC) Service-Based Tariff (SBT) consumer banding framework, introduced in 2020 through the review of the Multi-Year Tariff Order (MYTO), and its implications for underserved electricity consumers in Nigeria. Drawing on consumer and investor-reflective tariff methodologies, as well as theories of energy justice and regulatory governance, the paper argues that although consumer banding emerged as a rational regulatory response to the structural insolvency of the Nigerian electricity sector, its design and implementation have reinforced spatial inequalities, privileged infrastructure-proximate consumers, and shifted the burdens of systemic privatization failures onto economically disadvantaged households.

The paper interrogates the extent to which electricity consumer categorization, commonly referred to as consumer banding, functions as a genuine consumer protection mechanism while simultaneously serving as an instrument for revenue generation and profit maximization by electricity distribution companies. Through a comparative analysis of South Africa’s Inclining Block Tariff (IBT) model and India’s multi-tier lifeline tariff framework, the study demonstrates that supply-hour-based tariff differentiation, as operationalized under Nigeria’s banding system, is both technically and normatively inferior to demand-side subsidy mechanisms anchored on verifiable consumption metrics.

The paper contends that the current framework inadequately balances efficiency, equity, and consumer welfare objectives, thereby undermining the broader goals of universal energy access and distributive justice. It concludes by proposing a reformed tariff framework grounded in energy justice principles, strengthened consumer protection standards, and comparative international best practices aimed at promoting greater fairness, affordability, and regulatory legitimacy within Nigeria’s electricity sector.