Re: Power Discos Still Dancing Naked

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By Michael Faloseyi

Last week’s edition of this column took time to narrate all that was wrong with the Nigerian Electricity Supply Industry (NESI). The venom with which Mr Yemi Adebowale, wrote was evident as he threw all caution to the wind and proceeded on verbiage exploration. For instance, an institution made up of credible individuals, many of whom had earned honours and distinguished themselves in various fields of human endeavours was described as useless. This amounts to taking the writer’s privileged access to the media to the extreme!

Notwithstanding, the issues raised readily resonate with ordinary Nigerians, and these are problems that the Nigerian Electricity Regulatory Commission (NERC) was created to solve. The Commission and operators both inherited these challenges. Though the expectations of Nigerians may not have been met, the Commission is not resting on its oars in addressing challenges as they arise. In this regard therefore, may have missed the point and misled the readers.

It will only be appropriate to provide insight into some of the industry-wide challenges the writer mentioned in his column. Some of the problems listed include load rejection by the electricity distribution companies (DisCos), a consequence of many misalignments in the electricity value chain— occassioned by past distortions of engineering designs due to political considerations and other extraneous factors. As a result, transmission infrastructure is not sited close to the appropriate distribution load centres and vice versa; in the same vein, the transmission infrastructure is not aligned with generation assets and vice versa. These are installations that predate the new owners of the DisCos and the regulatory authority. Nevertheless, both the Regulator and the operators have the responsibility to manage and correct this anomaly. Fixing these challenges requires enormous resources as well as time, and are being addressed by NERC.

Other issues raised include crazy billings, allegations of reluctance to meter electricity customers by the Discos, as well as accusations over alleged profiteering tendencies. Some of these issues are better addressed by the operators. In response to those other issues within the purview of the Regulator, one can submit that NERC has demonstrated enough concern and capacity to resolve these. For instance, no sooner had the Disco’s indicated their inability to provide meters at the rate required of them, has the Commission introduced the Credited Advanced Payment for Metering Initiative (CAPMI), an innovative step to ensure customers get meters through advanced payments.

The initiative made some impact on metering electricity customers but not in a manner the Commission had envisaged, and so the scheme was wound down. For instance, CAPMI lasted between 2013 and 2016, with 401,000 meters were installed. This is in addition to meters directly purchased and installed by the Discos. After reassessing the shortcomings of CAPMI, the Commission replaced it with the Meter Asset Provider (MAP) Regulation, aimed at assisting the Disco to engage private investors to fund their metering plans. MAP came into operation in June 2019 and has facilitated the installation of 266,000 meters. The Commission is not resting on its oars but still finding other creative ways of resolving these challenges. We may not have gotten to where we should be, but one cannot take away the fact that efforts are being made. These initiatives illustrate the Commission is conscious of the enormity of the challenge the industry is contending with and will not shy away from tackling it headlong.

In respect of the capping of the estimated billing, which Adebowale wrote extensively about, the Capping of Estimated Billing Regulation is to complement the Meter Asset Provider Regulation. The purpose is to discourage estimated billing and incentivize the Discos to meter their customers. It was in the course of monitoring compliance that infractions were discovered. The Commission subsequently, in June 2020, issued Notice of Intention to Commence Enforcement (NICE) action to seven DisCos. Regulation is a quasi-judicial function, and much like the famed wheel of justice, it may sometimes seem slow as the due process must be followed.

The essence of regulation is to ensure compliance and not to play to the gallery. That process entails that the Regulator should issue NICE as was done on June 10, 2020. The basic principle of fair hearing requires that the DisCos are allowed the right of reply, which some of them have. The responses will be reviewed before further regulatory action could be taken. At the end of the review, Nigerians will be informed of the decisions of the Commission. Unfortunately, that is what regulatory process entails- the due process

The Commission has never been in want of the political will to act appropriately or apply sanctions should the situation demand, and evidence of such abound. For instance, the management board of the Ibadan Electricity Distribution Company got dissolved over regulatory infractions for which the company is seeking redress in court. There are instances of fine imposed on the operators for breaches. For us at NERC, Adebowale’s claim of a magic wand to resolve these challenges within six months is highly welcomed. The Commission does not pretend to have all the solutions to the myriad industry challenges, and that is why stakeholders’ engagement is part of our regulatory decision-making process. We are open to fresh ideas.

––Michael Faloseyi, is Assistant General Manager, Government, External and Industry Relations, NERC.