A Review of the Nigerian Energy Industry

Electricity Discos, consumers contest NERC’s order on fixed charge

Sam-Amadi, NERC
Dr. Sam Amadi, NERC boss

23 July 2014, Abuja – A recent order by the Nigerian Electricity Regulatory Commission (NERC) exempting electricity consumers who have not been supplied electricity from distribution companies for up to 15 days from paying the fixed charge component of their monthly bills to their electricity distribution companies yesterday pit the operators and consumers at opposing ends.

At a public hearing set up by NERC in Abuja to entertain reservations that were majorly expressed by distribution companies in the Nigerian Electricity Supply Industry (NESI) on the new order, both parties differed on the new position which NERC said was introduced following the consistent complaints from consumers.

At the distribution end, the Assistant General of Enugu Distribution Company, Reuben Okoye, stated that NERC had initiated the order without due consultations with the operators.

Okoye explained that instances of power outages were mostly not caused by the distribution companies and as such, they could not bear responsibility for such outages that might arise from transmission or generation failures.

He further noted that it would be difficult to independently determine customers who had outages in a period and that the penalty for outages should pass across the entire value chain, not just to the distribution companies.

Similarly, Ernest Orji, who represented Eko Distribution Company, said the rule would be difficult to implement as the distribution companies do not yet have the statistical meters to determine such claims from consumers.
Orji said: “In our submission, we argued that there should be a new structure for Service Charge (SC) and no more Fixed Charge so that a percentage of supply is given as compensation to consumer or exempt them from paying the SC for that period.”
Orji’s submissions were also buttressed by Abimbola Odubiyi who represented Abuja Distribution Company at the public hearing. Obubiyi stated that the order would encourage a culture of consumers not paying their bills.

He urged NERC to look into the order to ensure sustenance of market financial progress as well as extend the rule to the Transmission Company of Nigeria (TCN), generation companies and gas suppliers in the case of similar defaults.

However, the consumer group which was represented by the National Vice-President of the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Alhaji Sanusi Maijama’, a suggested that the distribution companies were ripping consumers off from fixed charge payments.

Maijama’a said: “If one million consumers pay the N750 fixed charge monthly, then they are paying N750 billion to the Discos for doing nothing. I have said earlier that if there is efficient service and every consumer pays his bill, government can generate much revenue than the oil sector.”
The representative of the Manufacturers Association of Nigeria (MAN), Okpe Sunday Adejoh, equally said over 95 per cent of the industries in Idu industrial zone in Abuja had opted out from grid electricity following incessant outages.

Adejoh argued that the 15-day outage penalty period was not justifiable enough for consumers as a day of outage means huge loss.
He added that distribution companies should consult with generation companies and the transmission company to share such penalties considering that the monthly fixed charges they collect are also shared among them.

But speaking on the importance of the public hearing, the Chairman of NERC, Dr. Sam Amadi, stated that the order to revise the conditions for the fixed charge was made following complaints by customers on irregular electricity supply and with agitations on the cost of providing such service arising from the tariff structure.

Amadi who said the commission would consider he submissions made at the hearing, also explained that: “NERC issued an order with ‘Order No: NERC/FC 133’ dated May 1, 2014, directing that a customer who has not received continuous or cumulative electricity supply for a period of 15 days in a month shall not be required to pay the fixed charge, provided that the disruption is not due to non-payment of electricity bills or customers action.

“Discos should note that recouping their investment as entrenched is dependent upon performance and anything short of that will mean cheating on electricity consumers,” Amadi added, while stating that NERC would decide from the consultation to either expunge the order, keep it, or revise it to make for clarity.


– This Day

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