A Review of the Nigerian Energy Industry

NERC seeks consumers’ scrutiny of new electricity tariff

Sam Amadi, NERC
Sam Amadi, NERC

*Says consumers must help tackle discos’ inefficiencies

05 January 2015, Abuja – As the newly-approved tariff for electricity consumption in Nigeria begins from January 1, 2015, the Nigerian Electricity Regulatory Commission (NERC) has said that it would be relying on consumers across the country to bring the various electricity distribution companies to account for the market commitments they had earlier made.

NERC, which recently reviewed the Multi Year Tariff Order (MYTO) framework, taking into cognisance extant market challenges to approve a cost-reflective tariff for the electricity market stated that without the active participation of electricity consumers in the market, it will be quite difficult for it to nip in the bud extant inefficiencies of the distribution companies as seen in their operations.
The Chairman of NERC, Dr. Sam Amadi, explained in a recent interview with THISDAY that the commission had upon its approval of the new tariff, which will see an increase in consumers’ expenditure for electricity services, insisted on improved service delivery to consumers.

While insisting that consumers have a role to play in this regard, Amadi also noted that the possibility of electricity consumers getting tired of demanding for improved services from market participants, especially distribution companies, will not go well for the regulator who majorly relies on information from them to punish recalcitrant operators.

NERC had in the new tariff provided a six-month embargo on its application to residential electricity consumers in the country. These classes of consumers make up a large percentage of consumers serviced in the market, the commission however opted to exclude them from paying the hiked tariff on the condition that service delivery to them was still quite poor.

The new tariff applies to other classes of consumers but will only take effect on residential consumers approximately in June. Amadi however hopes that extant challenges in the market would have been addressed to give the sector some level of steadiness in service delivery to consumers.

“There is a possibility of consumer fatigue but it is not in their best interests. If consumers don’t complain, it means that the regulator will not have enough information to monitor consumer service.Discos will give their reports indicating that everything is fine but it is complaints from consumers that trigger the regulator to ask questions. If a disco shows us records that are favourable, how do we match them with realities from the consumer end if there is nothing from them?,” Amadi said.

He further said: “Abuja Disco for instance, has what it claims to be a world-class customer call centre and if you go there, they show you computers but whether calls from consumers pass through them, nobody can testify except if people actually call and give their feedbacks, we will then know from them if that is efficient because the day the regulator decides to go there, they will make it work.
“My message therefore is that it is consumers who really hold the greater responsibility of enforcement because if they are not actively seeking for remedies, then the regulator will be deceived. But when they are active, the regulator will also be under pressure to justify their confidence and so we will encourage consumers not to be fatigued but remain active because it is their rights; they are paying bills by the way and should continue to insist on quality service.”

Speaking on the commission’s expectations from operators following its approval of the new tariff, Amadi said: “The good thing about the tariff from NERC is that we have opened their business plans and can now say that all those people who made commitments will have to live by it. In calculating the tariff, everybody’s presumption and commitments have already been factored as if it is done and so the money has been discounted.”

“What that means is that as they are given their tariffs now, if the loss component is 50 per cent and you committed when you bought the asset that you are going to reduce the loss by 20 per cent, we have dropped your loss from 50 to 30 immediately because you have committed and said that you will improve the system by this amount and even if you’ve not made those investments it is discounted and will not be passed to the consumers.

“The outlook is that by next year, we expect better improvement because we are going to now be regulating them against their commitment which has figures in terms of metering, transformers and if we guarantee you a new tariff, then it means that you are under obligations to reduce those losses and that is what will change.

We want to see more accountability and transparency in the management of the distribution networks, we want the consumers to be able to see the transparency and clarity in the system as well as more accountability such that even if we don’t have so much power, we are still able to accountably manage whatever we have,” he added.
*Chineme Okafor – Thisday

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