Closing the Electricity Metering Gap in Nigeria

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Following a recent disclosure by the Nigerian Electricity Regulatory Commission (NERC) that the metering gap in the country’s power sector has continued to enlarge, Chineme Okafor examines the approach to closing the gap

NERC has said six in every 10 users of grid generated electricity supplied by 11 electricity distribution companies (Discos) in Nigeria, have not been metered so far, thus indicating that five years into power privatisation, the practice of estimated billings by the Discos has remained prevalent.

In effect, the NERC report, which THISDAY gathered was prepared after the Discos had undertaken a comprehensive review of their metering statuses, showed that even though comprehensive metering was part of the performance agreements, the Discos signed with the Bureau of Public Enterprises (BPE) during the privatisation exercise, they hardly followed the plan, hence the widening gap.

To arrest this, the NERC indicated it would introduce a regulation to cap estimated bills given every other months to consumers by the Discos across board. This it suggested, could push the Discos to begin comprehensive metering of customers within their networks.

It equally noted that in the regulation, which it has asked for stakeholders’ input, consumers, who reject meters installed or do not want meters to be installed at their premises by Discos would be cut off from electricity supplies.

Metering Report

In the consultation paper on capping of estimated bills NERC recently posted on its website, and which THISDAY obtained in Abuja, the commission said the 11 Discos in the power market had a collective customer base of 8,292,840, but have only been able to provide meters for just 3,591,168, while 4,701,672 have not been metered as at August 2018.

In its explanation of the development, NERC stated that the percentage of unmetered customers in the market was 57, adding that the practice of estimated billing by the Discos has continued to fuel payment apathy amongst consumers.

It said to cap estimated billing by Discos, it was considered options such as a cap on estimated billing based on the projected average monthly consumption of each tariff class in the Multi Year Tariff Order (MYTO) model; application of the average consumption of each tariff class within a franchise area as the cap for estimated billing of unmetered customers; and capping the estimated bill of consumers within a business unit to the average vending of the same tariff class within the area.

According to the NERC, the performance agreement executed between the Bureau of Public Enterprises (BPE) and the core investors in the 11 Discos provided for the installation of end-use meters based on agreed targets. However, the actual performance as at August 2018 indicated that about every six in 10 customers were unmetered and therefore, subjected to estimated billing.

It explained: “The practice of estimated billing in the Nigerian Electricity Supply Industry (NESI) has continued to constitute a major source of complaints by customers in all the Discos.

This practice has resulted in growing customer apathy to pay their bills leading to huge unsettled Disco invoices and calls for urgent metering of unmetered customers and timely reading of customer’s post-paid meters.”

NERC noted that the recent effort of the National Assembly to legislate against the practice of estimated billing reflected the public concerns about inadequate meters for electricity customers and flagrant abuse of the estimated billing process for both post-paid metered and unmetered customers.

“In pursuit of eliminating the practice of estimated billing for unmetered customers in the NESI, the commission approved the Meter Asset Provider Regulation (MAP) with the main objective of fast tracking the roll-out of end-use meters for all consumers, thus ensuring that customers pay for only what they consume.

“The implementation timeline for closing the metering gap is within three years, hence the need to address the concerns of customers during the transitional period,” NERC added.

It further stated that: “In line with the applicable regulations of the commission, no customer shall reject the installation of a meter on its premises. Distribution licensees shall deny service to any customer who rejects the installation of a meter on its property.”

Lingering Conversation

Though the NERC report showed there was an increase in the number of consumers without meters, its content was however not entirely new considering that conversations about the sector’s metering gap have been ongoing for years now.

Consistently, the Discos have had to explain the challenges they have with ensuring universal metering of consumers in their networks, and each time such conversation came up, it had always been with lots of backlash and accusation that they were not keen on providing meters for their consumers because they benefitted from estimated billing.

Earlier in the year, an altercation between the Minister of Power, Works and Housing, Mr. Babatunde Fashola, and Discos on issues bordering on service delivery, which included metering, had the Executive Director for Research and Advocacy of the Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, claiming that the metering gap in the sector became what it is because the government failed to invest in metering during the over 62 years it owned and operated the Discos.

Oduntan equally noted that no other party could be more interested in universal metering of consumers than the Discos because according to him, “metering alone reduces collection losses very significantly and improves customers’ willingness to pay.”

New Approach

Further to see that a process to end the anomaly was started and sustained, the NERC initiated a new electricity metering regime called the Meter Asset Provider (MAP) regulation, which was expected to kick off April with the invitation and shortlisting of independent meter firms to supply and install metering devices for consumers within the Discos’ networks on terms agreed on.

The NERC in a statement then, reasoned that the MAP regulation will fast-track its desire to close up the metering gap, as well as ensure that electricity consumers in the country only pay for what they actually consume.

It explained that it approved MAP to improve the supply, installation and maintenance of end-user meters by other parties other than the 11 Discos, adding that Discos will be given about 120 days from the date of the MAP commencement to initiate a thorough procurement process to engage third party meter providers.

“The regulation is expected to fast track a closure of the metering gap and encourages the development of independent and competitive meter services in the electricity industry.

“The Meter Asset Provider (MAP) Regulation (Regulation No. NERC/R/112), which would become effective on April 3, 2018, introduces meter asset providers as a new set of service providers in Nigeria Electricity Supply Industry.

“As assets with a technically useful life of 10 to 15 years, the regulation provides for the third-party financing of meters, under a permit issued by the commission, and amortisation over a period of 10 years,” said the NERC then.

According to the commission, the electricity distribution companies, in line with their licensing terms and conditions, are obliged to achieve their metering targets as set by the commission under the new regulation. The contracting of Meter Asset Providers shall be through an open, transparent and competitive bid process thus ensuring that meters are provided at a least cost to electricity customers.”

Clarifying that electricity meters were not to be deployed free of charge in the market by Discos, NERC said, “It is to be noted that there are no free meters even under the current tariff regime as all customers, including those on estimated billing, currently pay for a return on the investment made by electricity distribution companies on meters in their networks.”

“Under the new MAP regulation, customer classes shall be amended to ensure that customers only pay for meters when a meter is physically installed in their premises. The electricity bill of customers provided with a meter under the new regulatory framework shall comprise of two parts – energy charge and metering service charge,” it added.

NERC explained that the payment of metering service charge will be removed from the customer electricity bill upon the full amortisation of the meter asset over its useful life, and that all faulty meters are expected to be repaired or replaced free of charge within two working days, except in instances where it is established that the customer is responsible for the damaged meter.

Additionally, the regulatory commission said the new MAP regulation would require the investors to acquire a minimum of 30 per cent of their metering volume from indigenous meter manufacturers.

“This local content threshold may be adjusted by the commission from time to time in line with the verified manufacturing volume of local manufacturers.

“The 11 electricity distribution companies are expected to, within 120 days from the effective date of the regulation, engage the services of MAPs towards the achievement of their three-year metering targets prescribed by the commission.

“The performance of Meter Service Providers shall be governed by the provisions of the Meter Asset Regulation, technical codes of the electricity industry, and a meter services agreement/service level agreement signed with the distribution companies,” it explained.

The MAP regulation which is still under review, THISDAY learnt would in the coming weeks at a meeting in Lagos, be subjected to a thorough scrutiny by relevant stakeholders in the market, and this is notwithstanding that some Discos have begun its implementation with the engagement of metering firms the NERC has so far shortlisted to participate in the scheme.

Reactions

Based on the development, and the NERC’s introduction of the MAP, advocates for standard consumer service delivery believe there could be hope for a close up of the metering, if the new regulation is adequately enforced.

Speaking to THISDAY on the side-lines of the just-concluded 2018 edition of the Power Safety Summit in Abuja, the President of the Nigerian Consumers’ Protection Network, Mr. Kunle Olubiyo, explained that existence of a clear and updated statistics on metering gap would go a long way in helping Discos invest in meter acquisition and installation.

“The statistics are based on the ones that have been captured recently by the Discos, who were asked by the NERC to conduct a thorough room-to-room, house-to-house assessment of the metering gap in Nigeria and that has helped to increase the gap because there were some people that were not documented,” said Olubiyo.

Expressing optimism on the MAP, he said, “The good thing about it is that even though every business comes with its challenges, and the power privatisation exercise is not different from this, we now expect the MAP to take off by the first quarter of 2019, and with that within a short period of time, we should see progress.

“Consumers should not lose hope. We expect that from the data we have now, within the first six months, the metering gap should be closed up and I am confident the MAP will do this, even though I believe we still need to continue to emphasise on sustained service delivery.”