NERC to Enforce Compensation for Under-supplied Electricity Customers

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•FG mulls exit from power sector

Emmanuel Addeh in Abuja

Electricity consumers may finally begin to get some compensation for under-supply of power to their homes and businesses from July, the Nigerian Electricity Regulatory Commission (NERC), has said.

The move comes against the backdrop of complaints by energy consumers that the Service-Based Tariff (SBT), which has led to a huge increase in electricity bills paid by customers only places obligations on them without appropriate sanctions for Distribution Companies (Discos) that under-supply.

Under the policy, customers are meant to pay for electricity based on how long they receive power daily, with payments reflecting the quality of services offered, and based on a minimum average hour of supply and other metrics.

Consumers are divided into five bands A–E, where band A is for customers who get 20 hours of power and above daily; B has customers who get power for 16 hours daily and C covers customers who enjoy power for 12 hours and above a day.

Similarly, those that enjoy power for eight hours and above fall under D, while band E is for customers who only get four hours and above but below eight hours of power supply daily.

However, Deputy General Manager, Markets Competition and Rates, NERC, Mr Abba Terab, stated at the 58th session of the “Power Dialogue,” organised by the Electricity Hub that for now, compensation will be based on a 60-day circle.

He stated that as the process gets fully automated, the commission will migrate Discos to a monthly compensation arrangement.
According to him, customers who do not get the expected quality and quantity of supply will be refunded and downgraded to a new band while there will be an attendant adjustment on their tariff levels.

He stated that customers have now hit 78 per cent cost reflectivity, especially those in band A and B.
He said in cases where the problem of lack of supply was not from the Discos, the Transmission Company of Nigeria (TCN) would be compelled to compensate the Discos with the same procedure for sanctions going for the Generation Companies (Gencos).

He said: “If I am in band A, I should get band A service and when I am paying band A service and I don’t get band A service, but I get band B service, I should be compensated accordingly. That’s the position of the commission and it has been made very clear to all operators within the industry.

“We believe that by the time we carry out the minor review, this will be done. When the automation of the meters is done, compensation will be on a monthly basis. If over a period of six months a customer does not get minimum service, he will get a refund on a monthly basis for the energy.”
He added that towards implementing the penalty regime, the commission is already reviewing the data and at the end of the period, before the minor review is concluded, appropriate compensation for customers will be passed on to the defaulting entity.

“But subsequently, as we fully automate some of the distribution transformers, because feeders might still be on even when at their level customers don’t have supply. When this is fully automated, it will be done on a monthly basis continually from July onwards,” he said.

He stated that the industry was on the right track on the service-based tariff policy, which is being accelerated by the installation of meters nationwide, adding that because of the implementation of the policy, more energy is being delivered.
“So, some of the generators are operating at an optimal level and are now being pushed to their limits and that’s why some of them (power systems) are failing, maybe because of limitation in gas supply,” he said.

Meanwhile, The Bureau of Public Enterprises (BPE) has said that it is looking at various strategies to reform the government-owned TCN, adding that the ultimate plan is for the federal government to exit the power sector completely.

Director-General of the organisation, Mr Alex Okoh, was quoted by a Bloomberg report as having made the comment in an interview yesterday, saying that the agency will share its proposal “very shortly” with the National Council on Privatisation (NCP) that the state-owned corporation be unbundled and then privatised.

The five plants that have not been put up for sale will remain state-owned for now, Okoh said, adding that “the objective ultimately is for government to exit the power sector and just let the private sector drive the sector.”
Okoh said the federal government was right to have terminated the incomplete process that the agency initiated for all 10 facilities in 2014, leading to the revocation of the process for the Benin and Calabar plants.

EMA Consortium, controlled by Benedict Peters, which was named a “preferred bidder” for the Benin and Calabar plants seven years ago, obtained a pair of injunctions from the Federal High Court in June 2019 barring the BPE from selecting new buyers for the two sites.
On May 9 this year, the company warned that the Calabar and Benin facilities are “not available for sale” as they are the subject of ongoing litigation.

“We are hopeful in reaching an amicable solution for the benefit of the nation,” Managing Director of the Power, Infrastructure and Real Estate Division of Aiteo Group, Ransome Owan, told Bloomberg by email.

But Okoh said the BPE was challenging the injunctions in court, as the agency believed that it’s on “solid legal ground” because it was within its rights to cancel the transactions at any stage before executing the sale of the shares.