Lagos Power Standoff: DisCos Reject State Government’s Plan to Scrap NERC Electricity Bands

A significant standoff has erupted between Lagos State authorities and Electricity Distribution Companies (DisCos) over ambitious plans to eliminate the Nigerian Electricity Regulatory Commission’s (NERC) service-based customer classification system, commonly known as the electricity bands.

The dispute centres on the state’s push for a uniform, reliable 24-hour power supply across Lagos, underpinned by smart metering, full cost-reflective tariffs, and an independent state electricity market. DisCos have described the move as premature, warning that it risks consumer unrest, market distortions, and potential blackouts without guaranteed stable generation and supply.

At a ministerial press briefing in Alausa, Ikeja, on Monday, May 18, 2026, Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, outlined the administration’s determination to end the banding system. Under the NERC framework introduced in 2020 and significantly updated in April 2024, customers are categorised into Bands A to E based on daily hours of supply: Band A (minimum 20 hours), Band B (16 hours), Band C (12 hours), Band D (8 hours), and Band E (4 hours). Band A customers pay higher, cost-reflective tariffs, while lower bands benefit from subsidies but receive poorer service.

Ogunleye emphasised Governor Babajide Sanwo-Olu’s commitment: “Part of what we are trying to enable is an environment that eliminates banding. Banding says that you have 3, 8, 12, or 21 hours of electricity. What we are saying is, is it impossible to have a continuous power supply?… I strongly believe that we can do it. We have seen it before in this city.”

The state is leveraging the Lagos State Electricity Law 2024 and the newly operational Lagos State Electricity Regulatory Commission (LASERC) to foster a competitive market. Key elements include aggressive smart metering rollout (targeting 100% penetration starting July 2026), private-sector independent power producers (IPPs), renewable integration (including widespread solar streetlights and battery storage), and the elimination of estimated billing. The long-term goal is 95-100% grid availability, single-digit losses, and a shift away from subsidies toward fully cost-reflective pricing.

Power operators, speaking anonymously to news men due to the issue’s sensitivity, acknowledged the laudable intent but cautioned against hasty implementation. They stressed that abolishing bands without first ensuring adequate generation and universal metering could lead to widespread protests, especially from residents in underserved areas currently on subsidised lower bands.

One operator noted the practical challenges: “To stop estimated billing, you must meter everybody… There’s a cost element to metering.” They highlighted that removing the incentive structure of bands — designed to encourage DisCos to migrate customers upward to Band A — could undermine efforts to improve supply. “If you now remove band classification and ask all of them to pay a cost-reflective tariff, the people without electricity will protest,” another warned.

DisCos argued that the current system compels performance improvements and should only be phased out once stable supply is achieved statewide. They also raised concerns about policy continuity beyond the current administration, as Governor Sanwo-Olu’s term ends in 2027.

Lagos, Nigeria’s commercial hub, has long grappled with unreliable power, forcing many residents and businesses to rely on costly generators. The state’s moves align with efforts to create a more autonomous Lagos Electricity Market, including licensing new operators and infrastructure upgrades. However, the sector remains constrained by national-level challenges in generation and transmission.

As the debate intensifies, stakeholders await potential regulatory guidance from NERC and LASERC. The outcome could set a precedent for other states navigating the transition to cost-reflective tariffs and improved service delivery in Nigeria’s power sector.

This developing story underscores the tension between ambitious reform and operational realities in Nigeria’s quest for reliable electricity.