In this particular article, we will be looking at the subjects of 2 business licenses in the electric power sector – Electric Power Transmission System (SO) Operator License and Electric Power Trade License.
Topics for discussion will be:-
– What transmission system operators and electricity trading companies do.
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– Licensing requirements for transmission system operators and electricity trading companies.
– Post-authorisation regulatory requirements for transmission system operators and electricity trading companies.
What Is a Power Transmission System Operator( Where “SO”) do?
A Power Transmission SO is an independent company of the Transmission Company of Nigeria (TCN) in:-
– Distribute the power produced in accordance with the network code at the least cost on the basis of nomination by the producers.
– Manage electrical system emergencies and electrical system restores.
– Performs demand forecasts, incorporating the load nomination of the electricity distribution company (DISCO).
– Provision of ancillary services and recovery of the cost of acquiring these services.
– Design, install and maintain SCADA and communication facilities for efficient network operation.
– Maintain and improve the reliability, stability and security of systems.
– Facilitate the functioning of the electricity market through bilateral exchanges.
– Apply the network code and the rules of the electricity market.
What Is a Electric Powerful trade company do?
An electricity trading company is simply a company that has been authorized to buy and sell electricity between electricity sector participants through the use of power purchase agreements (PPAs) and short-term and long-term resale agreements.
What is the Regulatory Frame governing Transmission N/A and Power Trade companies in Nigeria?
Transmission OS and electricity are regulated by the Electricity Sector Reform Act, the Nigerian Electricity Regulatory Commission (NERC) through its various regulations (amongst which the Licenses Regulation NERC of 2010), the Nigerian Bulk Electricity Trading Company PLC (NBET) and the Federal Government. Ministry of Power.
How are apps for SO and Power Trade licenses started?
Applications for SO and Power Trading licenses must be made by legal representation to the President of NERC and these applications must be made in 3 hard copies and an electronic version in MS Office software format.
Applications must be acknowledged and this acknowledgment must be communicated to the candidate. NERC may request additional information from the applicant within one month of receipt of the request.
Just as previously Explain As it concerns DISCO, are apps obligatory at be published in 2 Daily newspapers as a Licence pre –condition for the objective of receive any possible objections at be determined?
Yes they are.
How long will be this take for SO and Trade Licence apps at be treaty?
SO and Power Trading license requests must be processed within a maximum of 6 months from the date of receipt/acknowledgment of receipt of the license request.
What are the terms for Power Transmission SO and power Trade licenses?
The requirements for a Transmission System Operator (SO) license are:-
– A completed application form.
– A certificate of incorporation and MEMART (Memorandum / Articles of Association) of the applicant company.
– A title deed registered on the site, or a transfer/donation deed, or proof of submission of a title deed to a competent land processing agency.
– A tax receipt certificate for the last 3 years.
– A 10-year business plan (please consult your attorney for the required content of a business plan under NERC regulations).
– Network configuration.
– Line voltage level (132 V and above).
– Points of interconnection.
– Ownership of main, additional and regional control centers.
– Communication center facilities (VOIP, radio links, fiber optics).
– Ability to plan and operate the system.
– Center for training and certification of system operators or alternatives.
– Ability to procure and pay for ancillary services.
– Functional equipment and installations of the energy management system.
– Operational procedures for dispatchers, if available.
– A Health & Safety policy.
For a Power Trading license application, the requirements are:-
– A completed application file.
– A certificate of incorporation of the applicant company and its MEMART (Memorandum of Articles)
– A title deed registered on the site or an agreement of sale or deed of transfer/donation or proof of submission of a title deed to a competent land processing agency
– A tax receipt certificate for the last 3 immediate years.
– A 10-year business plan (please consult your attorney on the required content of a business plan under NERC regulations).
– A financing agreement or a letter from a financial institution.
– An electricity purchase contract with an approved electricity production company (GENCO) .
– A network agreement with an approved transport company.
– A retail agreement with end users for the supply of electricity or a resale agreement with an authorized distribution company (DISCO).
What are the validity periods of SO and Power Trade licenses in Nigeria?
Both SO & Power Trading licenses have a validity period of 10 years and, like DISCO licenses, can be extended, modified, suspended or cancelled.
What are the costs associated with pimping SO and Power Trade licenses in Nigeria?
Transmission system operator licenses come with the following tariff implications:-
Processing fee – 1 million naira
License Fee – $300,000.00 (Three Hundred Thousand US Dollars)
License Renewal / Term Extension Processing Fee – 500,000.00 Naira
Annual operating costs – 1.5% of SO costs per kWh.
Power Trading licenses come with the following fees:-
Processing fee – 1 million naira
License Fee – $75,000.00 (Seventy Five Thousand US Dollars)
Processing Fee for License Renewal / Term Extension – 500 thousand Naira.
Annual operating costs – 1.5% of trading company costs per kWh net of generation and transmission cost.
Conclusion :- To better understand the entire regulatory framework governing these 2 electricity business licenses will require additional consultation with your attorney for those wishing to venture into any of these businesses. The next article will look at another type of electricity sector business license – the electricity transmission license.