*As DisCos flag off implementation
Lagos — The Nigerian Electricity Regulatory Commission, NERC on September 1 flagged off new tariff system tagged Service Reflective Tariff.
NERC said the Service Reflective Tariff will help reduce the perennial issue of estimated billing and lack of equity of pricing among consumers, adding that it will be commensurate to the quality of service measured by number of hours and quality of service to clusters of electricity customers.
Electricity customers are to expect accelerated metering and improvement in the quality of service as DisCos will be committed to service level with clusters and electricity customers.
To this end, President Muhammadu Buhari had ordered an end to estimated billing, and issued a 10-day ultimatum to DisCos to install meters for customers who had paid upfront, according to a memo by NERC on Monday.
Electricity customers at the commencement of the Order will have their estimated bill capped to incentivise metering by the DisCos.
According to the note, the service-based tariff will relieve the government of paying electricity subsidy on the rich and allow it to divert scarce resources to more pressing sectors, including education and healthcare.
What the tariff review will achieve
The review will ensure that prices charged by DisCos are fair to consumers but sufficient to allow recovery of efficient cost of operation, including a reasonable return on the capital invested in the business.
The review will also provide the path to transitioning the Nigerian Electricity Supply Industry, NESI to service-based cost-reflective tariffs by July 2021.
The intervention will ensure metering gap is closed within two years, NERC said in a note.
How the review was achieved/How it will affect customers
|Tariff Bands||Hours of Supply||New Tariff Class||Tariff Cost/kwh|
|Tariff Band A||20 hrs. and above||NON-MD|
|Tariff Band B||16 hrs. and above (but less than 20 hrs)||NON-MD|
|Tariff Band C||12 hrs. and above (but less than 16 hrs)||NON-MD|
|Tariff Band D||8 hrs. and above (but less than 12 hrs)||NON-MD|
|Tariff Band E||4 hrs. and above (but less than 8 hrs.)||NON-MD|
Applicable Tariff For Customers in Band D and E
Tariff will protect the poor- NERC
Defending need for the review, NERC said the tariff was approved by President Buhari, insisting that the “poor” would not be affected in the increment.
“…there will never be a good time to review the tariff. The interest here is to ensure that Nigerians are migrated to a threshold where there will be continuous improvement in the quality of service delivery”.
“The tariff review is only expected to affect less than the richest 25 percent of the population living in the most prosperous areas of the country. The richest 10 percent of the population will cover as much as 50 percent of tariff increase” it added.
NERC assured that the service reflective regime will allow for incremental improvement in the quality of supply, stating that depending on the historical supply pattern, customers will observe increased hours of supply as the Discos migrate them to higher service bands. “Ultimately, customers will pay for service commensurate to the number of hours they receive”.
DisCos flag off implementation
Abuja Electricity Distribution Company, AEDC, and the Ibadan Electricity Distribution Company, IBEDC have commenced immediate implantation.
In a release on Wednesday, IBEDC’s Chief Operating Officer, Engr. John Ayodele said the review is critical to the provision of more efficient and reliable service to customers, upgrade aging infrastructure and be more responsive to the complaints of the customers.
He said “ the new tariff plan will not only empower us to provide better service, but it will also promote fairness, we therefore appeal for the understanding and cooperation of our esteemed customers as we commence the implementation of the Service Reflective Tariff through prompt payment of electricity bills and vending, as we are resolutely committed to delivering improved and better service”
Engr. Ayodele further stated that the tariff review will not affect customers experiencing an average power supply availability of less than 12 -hours per day over a period of one month.