The Nigerian Electricity Regulatory Commission (NERC) has alleged that no electricity distribution company (Disco) in the power sector has been able to meet the demands of electricity consumers in the country since the sector was reformed in 2005. It explained that the Discos have largely neglected the demands of the consumers, with service apathy mostly experienced in areas they don’t consider economically viable.
For this reason, NERC stated that it has proposed to have the Discos allow their electricity distribution responsibilities shared with willing parties under six new franchise models. This, it added would ensure a good number of Nigerians have access to electricity.
“The sustainability of this traditional regulatory framework is increasingly becoming difficult due to continued technological improvements and advancement in the capabilities of Distributed Energy Resources (DER).
“Additionally, since the commencement of the power sector reforms in 2005, the Discos in Nigeria are unable to satisfactorily meet stakeholders’ expectations in the provision of access to safe and reliable electricity services to all customers within their franchise territories, especially those areas that are not considered to be economically viable,” said the NERC in a consultation paper on distribution franchise proposal it is considering, and want inputs from stakeholders.
It stated that, “introducing sub-franchising of Discos’ operations and coverage areas is expected to improve quality of supply of electricity to customers through investment in metering, billing, collection and network rehabilitation and expansion.”
According to the regulator, proposals for franchising arrangements could either be initiated by Discos or customer groups within a specified geographical boundary. In the case of a community making such proposal, NERC stated that it has to be through a registered association declaring its interest and thus initiating a franchising arrangements in the areas of supply, metering, billing and collection including additional investment in the distribution networks where appropriate.
“Additionally, any unserved or underserved community have the option of exploring the provisions of NERC’s regulation on Independent Electricity Distribution Network (IEDN) in finding solutions to their supply challenges as may be applicable.
“The overarching objective of the proposed regulation on distribution franchising is to facilitate the development of favourable business models that would attract third party investments in the supply of adequate, safe, reliable and prudently priced electricity to customers of Discos,” it explained.
In addition, it said depending on the terms of the franchise agreement, the new proposal would stimulate prudent investments in filling the funding and infrastructure gap in the distribution sector; bridge power supply deficit; improve customer satisfaction in terms of availability, quality of electricity supply and customer services; and facilitate adoption of advanced technologies in the design and operations of modern grid systems that can offer cheaper and flexible alternatives to customers.
The NERC also stated that the current power generation level in the country was significantly lower than the customer load demand in the various Discos across the country, and to bridge this supply deficit, the franchisee may procure from other sources of power outside the Discos’ contracted capacity with the Nigerian Bulk Electricity Trading Plc (NBET) on a bilateral arrangement through the national grid or from embedded generation sources.
“In this regard, the bulk power procurement regulation and embedded generation regulation shall be applicable as appropriate,” it added, noting however that the franchisee will operate under the overall guidance of the Discos’ license, just as the Discos remain responsible to the NERC for compliance with its licensing terms and conditions.
“In the event that the franchisee has surplus power, arrangement could be made for the sale of such surplus power to the existing distribution network as embedded generator to supply neighbouring areas or can be exported to other off-takers outside the resident Disco through the transmission grid,” said NERC which stated its approved tariffs under the Multi Year Tariff Order (MYTO) would be used in this regards, but with exceptions where the franchisee makes investments to provide additional power at a premium cost outside the provisions of the MYTO.
On the six model it proposed, it said it could be: “TB1: Multiple 33kV distribution feeders with the input at 132/33kV transmission/distribution interface to supply customers at 33/0.400kV or 11/0.400kV with the possibility of injection of additional power from embedded generators connected at 33kV and or 11kV busses on island or synchronised operation modes. This is mostly applicable in the urban areas.
“TB2: A single 33kV distribution feeder with the input at 132/33kV transmission/distribution interface to supply customers at 33/0.400kV or 11/0.400kV with possibility of injection of additional power from embedded generators connected at 33kV and or 11kV busses on island or synchronised approval operation modes. This is mostly applicable in the Urban Areas.”
“TB3: A Single 33kV distribution feeder with input at 33/0.400kV transmission/distribution interface to supply customers directly on 33/0.400kV with possibility of additional power from embedded generators at 33kV bus on island or synchronised operation modes. This model applies mostly to rural areas with a few in urban areas.
“TB4: Multiple 11kV distribution feeders with Input at 11/0.400kV distribution interface to supply customers at 11/0.400kV with possibility of injection of additional power from embedded generators connected at 11kV bus on island or aynchronised operation modes. This model applies mostly to delineated areas such as big markets, universities, schools, and hospitals within the urban areas with a few in rural areas.
“TB5: A single 11kV distribution feeder with multiple distribution transformers with input at 11/0.400kV distribution bus interface to supply customers at 11/0.400kV with possibility of injection of additional power from embedded generators connected at 11kV bus on island or synchronised operation modes. This model applies mostly to delineated areas such as markets, schools, hospitals within the urban areas with a few in rural areas.
“TB6: A single 11kV distribution feeder with a single distribution transformer with Input at 11/0.400kV distribution bus interface to supply customers at 11/0.400kV with possibility of injection of additional power from at the primary side of the 11kV distribution transformer on island or synchronised operation modes. This model applies mostly to delineated areas such as markets, schools, hospitals within the urban areas with a few in rural areas,” it added.