Talking Myto.

By Uche O.

19/10/2017
Table of Content
Brief History of MYTO

Criteria for MYTO revision

Components of MYTO

Classification of the MYTO Model

BRIEF HISTORY OF MYTO
MYTO came into force in July 2008, almost three years after the creation of NERC by
the Electric Power Sector Reform Act (EPSRA), 2005. The purpose of the MYTO is to
set costreflective tariffs which will allow the power sector to be properly funded and
functional. Pursuant to a methodology established under Section 76, EPSR Act 2005,
the Commission in 2012 completed a Major Tariff Review and thereafter enacted three
separate tariff Orders, one for each of the sectors in the Nigerian Electricity Supply
Industry (NESI}, namely generation, transmission and distribution {the MYT0-2 Tariff
Orders).

Prior to the establishment of the MYTO regulation, electricity tariffs were set by
the Utilities Charges Commission (UCC) and then implemented by the Nigerian
Electric Power Authority (later known as the
Power Holding Company of Nigeria or PHCN). The exact methodology used is
known only to those who worked in those organisations at the time, however
we can safely conclude that the approach was not aimed at setting tariffs that
placed the full cost of power on the consumers. This was because the PHCN was
funded by the Federal Government as a social welfare service. This meant that the
sector depended largely on annual budgetary allocations instead of the income from
its businesses. Due to the increasingly unreliable power supply over the last two
decades, all Nigerians will agree that the dependence of PHCN on Government funds
has led to an inefficient system which needed to be changed.

What is MYTO
Multi Year Tariff Order also known as MYTO is the electricity pricing model
which provides a fifteen (15)-year tariff path for the electricity industry with minor
and major reviews bi-annually and every five years respectively.
WHICH BODY IS RESPONSIBLE FOR MYTO
 WHICH BODY IS RESPONSIBLE FOR MYTO
The Nigerian Electricity Regulatory Commission (NERC) is an independent regulatory
agency which was inaugurated on 31st October 2005 as provided in the Electric
Power Sector Reform Act 2005.

The Commission is mandated to carry out:

The monitoring and regulation of the electricity industry
Issuance of licences to market participants, and
Ensure compliance with market rules and operating guidelines.

The first Commission was inaugurated in October 2005.

The last Commission was inaugurated in December 2010.

The Nominated Chairman of NERC is James Momoh as at April 2017, to be

confirmed by Nigerian Senate.

NERC is a Member of the Executive Council of African Forum for Utility

Regulators
.
 CRITERIA FOR MYTO REVISION

Rate of inflation
Foreign exchange rates
Cost of fuel (Gas price)
Actual available generation capacity
Forecast of electricity demand
Expansion of the transmission and distribution networks
Capital expenditure (capex)
Actual and projected sales
Operating costs (opex)
Fixed Cost (O&M)
Interest rates
Weighted average cost of capital (WACC)
Revenue collection efficiencies; and
Subsidies.
COMPONENTS OF MYTO-Pre Dollar rise
COMPONENTS OF MYTO-Post Dollar rise

BASE (MYTO) Feb-16 Feb-17

NGN / USD fx rate
198.97 282 308.95
US CPI (#)
107.1 107.1 107.1
Gas fuel price (GFP) ($/mmBtu)
3.30 2.50 2.50
FIXED O&M (N/MW/Hr)
354.4 502.4 550.4
VARIABLE O&M (N/MWh)
2,474.9 3,507.7 3,842.9
VFCR (N/MWh)
7,606.6 8,167.3 8,947.8
Capital Recovery (N/MW/Hr)
4,747.2 6,728.2 7,371.2
Energy Charge
10,081.5 11,675.0 12,790.7
Capacity Charge
5,101.6 7,230.6 7,921.5
Wholesale Charge
15,183.2 18,905.6 20,712.26
MYTO II Model Structure
INPUT Control

Data / Assumptions
Generation, Transmission &
Distribution
Load Forecast
COMPUTATION Load Calculations

Generation Transmission Distribution

Distribution11
Distribution11
Distribution11
New Entrant Costs Costs
Costs
Costs(11)
Costs
Model

Investor Transmission Distribution

Distribution11
Distribution11
Distribution11 Investor
Module Depreciation Depreciation
Costs
Costs
Costs Module
(IPP) (11) (DISCO
)
Generation Transmission Distribution
Distribution11
Distribution11
Distribution11
Wholesale Tariffs Tariffs
Costs
Costs(11)
Costs
Prices

Regulatory Regulatory Regulatory

fee BTfee
Charges fee

OUTPUT
Tariff Summary
(End-user Tariff)
 CLASSIFICATION OF MYTO MODEL

New Entrant (IPP) Model

Distribution Model
Transmission Model
Successor Genco Model
Hydro Genco Model
Renewable Genco Model
 CLASSIFICATION OF MYTO MODEL
New Entrant Model (FIPL uses this Model)
For new generators (new IPPs), the Open Book approach is used to determine wholesale generation
tariffs. The Open Book approach assumes that each new IPP has an efficient generation technology
and a Power Purchase Agreement (PPA) negotiated on an arm's length basis for the contracted power.

There are broad general cost assumptions that feed the MYTO methodology as highlighted below:

Cost Input Description

Capital Costs, this includes the following:

EPC Costs
Land Acquisition
Site specific costs (infrastructure, water, etc)
Capital Spares
Connection to the transmission network
Fuel handling/storage
 SUMMARY
The MYTO models were created to ensure effective pricing and proper financial

availability for the power industries, it has so far tried to achieve that purpose

but has met several hitches along the way.

In the Near future the power investors are hopeful that the market as a whole

will take a more profitable turn, especially with the introduction of willing buyer,

willing seller plan.

Thank You.