A Review of the Nigerian Energy Industry

Discos free to remove fixed charges – NERC

01 October 2015, Lagos –  The Chairman, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, says power distribution companies in the country are free to abolish fixed electricity charges if they so desire.

Power transmission station
Power transmission station

He said NERC, as the power sector regulator, would not interfere in decisions bordering on their (Discos) tariff arrangement, as it would give approval where necessary on receipt of tariff proposals from the discos.

Amadi, who spoke to our correspondent in a telephone interview, said the commission had some proposals before it from the discos on tariff matters.

The NERC boss said, “Discos are free to do whatsoever they want as far as fixed electricity charges are concerned. They can abolish the charges if they want.”

But some discos, before now, had maintained that fixed electricity charges could be reduced but not abolished.

The possibility of eliminating the fixed cost element had been ruled out by some of them.

The Managing Director of Ikeja Electric, one of the discos operating in Lagos and its environs, Mr. Abiodun Ajifowobaje, was recently quoted at one of the company’s customer forum as saying that, “We cannot have zero fixed charges; there is no place in the world that pays zero charges on fixed charges.”

Household consumers of all the power distribution companies in the country currently pay N750 as fixed charge monthly.

The Senate, in August this year, directed NERC to abolish the monthly fixed charges being collected from electricity consumers by the discos.

The resolution followed a motion titled, “Unfair trade practices of electricity distribution companies in Nigeria”, sponsored by Senator Sam Egwu and Senator David Umaru of Niger East Senatorial District.

The senators accused the discos of conspiracy to rip off innocent customers despite epileptic supply of electricity to their homes and business premises.

They urged NERC to inquire into numerous complaints before it in line with the provisions of Section 74 (1) (b) of the Power Reform Act.

The senators also directed the discos to discontinue the practice of making consumers pay for meters, poles and transformers.

They, however, said that where the consumers had purchased those items, they should give notice of the purchase to the discos to enable them to recover the expenses from subsequent consumption of electricity.

Apart from this, they directed NERC to be reporting its activities periodically to the Senate.

Egwu had noted that NERC was established to, among others, license and regulate persons engaged in the generation, transmission, system operation distribution and trading of electricity.

According to him, the same NERC was also empowered by Section 32(1) (d) of its enabling legal regime to ensure that the prices charged those licensed are fair to customers and are sufficient to allow the firms to finance their activities.

The lawmaker, however, noted that the discos since the beginning of their operations in Nigeria had been ripping off consumers through fixed charges and bulk metering across the country.

He said, “The high tariff being charged by the discos does not make provision for payment of only electricity that is consumed even though bills are dished out without commensurate services being offered by the distribution companies.”

He also said, “This billing system is capable of ruining the economic power of most small scale businesses that require electricity to function.

“I am concerned that even those that have this prepaid meters are being billed a fixed rate of about N750 a month, irrespective of whether or not the person consumes electricity.”

Egwu therefore urged the Senate to mandate NERC to inquire into numerous complaints before it by consumers.

All the senators who contributed to the debate condemned the activities of the electricity distribution companies.

But also in September this year, the NERC Chairman said that the fixed charge component of electricity bills could not be tampered with, but stressed that the commission would always protect the interest of consumers as well as provide regulations that would support the business of the operators.

“We are going to make sure that consumers are protected and we are also going to make sure that the industry’s revenues are supported,” he was quoted as saying.

Meanwhile, Ikeja Electric, some days ago, moved to reduce the fixed charges for power consumption being paid by its customers by 50 per cent.


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