A Review of the Nigerian Energy Industry

Power: Fixed charge not illegal, fraudulent, NERC tells senators

17 August 2015, Abuja – Again, the Nigerian Electricity Regulatory Commission (NERC) has provided a strong defence for its inclusion of the fixed charge component in the electricity rate paid by consumers in Nigeria.

Dr. Sam Amadi

NERC said on Monday that the fixed charge component in the monthly bills of consumers was not illegal and fraudulent as stated by members of the country’s Senate last week.

As against the request of the senators, NERC also stated at a meeting with journalists in Abuja that if it decides to abolish the fixed charge component from the tariff charged by the electricity distribution companies (Discos), the impacts on the country’s emerging electricity market could be harsh, especially with investments to upgrade the system.

The Chairman of NERC, Dr. Sam Amadi said while responding to the query issued to the commission by the Senate, that in as much as the charge remains a standard industry practice across the globe, the case of Nigeria is however judged by the legacy problem of poor electricity generation capacity.

The senators had in the query asked NERC to explain the basis for the Discos’ inclusion of a monthly average fixed charge of N702 in the electricity bills of domestic consumers and others. They also requested for clearer explanation on the practice of estimated electricity billing as well as payments made by consumers for meter installation at their residences.

Amadi in this regard said that both fixed and energy charges are components that make up the monthly electricity bills of consumers. It however noted that the fixed charge was inputted to help operators in the sector prudently recover the capital and fixed cost investments they have made in the sector.

He noted that fixed charge was not tied to electricity consumption by consumers, adding that with it, the market pays power generators their capacity charges to cover for their capital cost, fixed operations, maintenance cost and two-third of tax cost.

“NERC respectfully argues that the fixed charge that consumers pay in the electricity market is not illegal or necessarily fraudulent,” Amadi said.


– This Day

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