A Review of the Nigerian Energy Industry

NERC to penalise DISCOs for rejecting power allocation

11 August 2015, Abuja –  The Nigerian Electricity Regulatory Commission, NERC, has read the riot act to any Electricity Distribution Company, Disco, that rejects electricity allotted it by the System Operators, SO, especially when there was no prior notification for such rejection.

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

The Commission in a statement issued weekend in Abuja, warned that it will impose financial penalties on any defaulting electricity distribution company.

According to it, “The Order number NERC 139 entitled ‘Order on the Imbalance Application Mechanism during the Transitional Electricity Market’, was issued on account of high incidence of indiscipline by electricity distribution companies who reject load allocations by the SO. “Nigerian Electricity Supply Industry (NESI) operates on the basis of a sharing formula approved by NERC, which the SO uses to allocate generated electricity to the distribution companies (DISCOs), many of which are lately rejecting allocation.

“Rejection of load allocation besides causing imbalance in the system is preventing electricity consumers from realising the maximum benefit of the recent increase in the electricity generation. Electricity generation in the country about two weeks ago notched 4,600 megawatts threshold.”

To curb such act of indiscipline, NERC in the Order said, “Where a distribution company has a constraint on its network that will make it unable to receive load, the DISCO shall declare such constraint to the SO a day ahead. Where a DISCO fails to give the required notice, it will be penalised.”

Besides, “Every DISCO is obligated to receive load as directed by the SO, even beyond its statutorily allocated load at any time. This additional load will not attract penalty. In allocating additional load to distribution companies, the SO shall take cognisance of historical data on Distribution Company’s ability to take power beyond their location.”

However, the Transmission Company of Nigeria, TCN, will be sanctioned if rejection of load allocation is caused by constraint in the transmission network.

Giving an insight into the background of the Order, which became effective over the weekend, the Commission’s Chairman, Dr. Sam Amadi, said it was aimed at eliminating existing imbalance and making Nigerians have maximum impact of the improvement in the generating capacity. It is also meant to incentivise operators to invest in their networks to take more power.

Amadi said most of the distribution and the transition companies have been using inadequacy of electricity supply as an excuse not to strengthen their networks. “The new threshold of power generation has exposed this weakness in their networks and we (NERC) have that responsibility to force them to invest in their networks,” he added.

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