Trends and Relationship among Electricity Supply, Connsumption and Tariffs

Abstract

The study describes the trends and determines the relationship among electric power supply, electricity consumption and power tariff in Nigeria. Data spanning 42 years (1981-2023) was analysed using the Pearson Correlation method and Granger causality test. Findings showed that Household income and electricity consumption exhibits positive relationship. So also is Household Income and tariff paid on Electricity Consumption. It was found that tariff paid on electric power influences the level of household electricity consumption but not the other way round. Equally, household income was found to have a causal effect on Tariff paid on electricity. The study recommends that the government, through the Nigerian Electricity Regulatory Commission, may wish to implement a tiered pricing structures so as to incentivize responsible usage across different income levels. Since tariff charged on electric power significantly impact electricity consumption, a tariff structure that charges based on ‘peak and off-peak’ (Time of Use tariff), will be a reasonable window to explore.