Electricity Regulatory Commission (NERC) has again increased electricity tariff without checking the excesses of the operators as they are yet to bridge their production gaps.
STAKEHOLDERS in the Nigerian Electricity Supply Industry (NESI) have always inferred that the Nigerian Electricity Regulatory Commission (NERC) is mostly doing the bidding of the 11 electricity Distribution Companies (DisCos) to the detriment of the customers. The proponents of this submission predicate their view on the subtle manner the commission has been reticent about the violation of some of the regulations. Besides, it is commonplace that the NERC does not regulate the excesses of the distributors thoroughly. Does it check whether the consumption of electricity is proportional to the running of the meters? Has it checked vouchers to discover whether they consist of kWh at one unit or not? This would assist customers to know any change in their transactions. Has it checked the breach of subscribing for a utility that a customer cannot have? Is it not a breach of contract? Should laws not regulate these anomalies? However, this is food for thought.
There are complaints are about the manner of vending the electricity to the customer. Some of the customers are concerned that their vouchers do not consist of their consumption rate. For instance, they are aggrieved that their vouchers do not indicate the cost of a kilowatt of electricity. Their angst, too, is about the measurement of their consumption, which, according to them, is inordinate. Besides, some of the customers say the units they subscribed to at the same amount in November 2020 and December reduced in January. Their observations predated the recent reports about tariff hike.
The Nation learnt from a customer of the Abuja Electricity Distribution Company (AEDC) Franklin Edo, in Kubwa, Abuja, said on “I bought 121 units for N6,000 on December 30th, 2020. But on 6th January, 202, I bought only 117 units for the same N6,000.”
In the cause of this investigation, The Nation learnt that some customers do not even bother to read through their vouchers. In other words, they are unaware of anything about their transactions.
Some categories of customers are under the contributory purchase of vouchers.
A Benin Electricity Distribution Company customer said “we only contribute to buy the units through my landlord’s son. I don’t know anything about the transaction.”
From Bauchi, a customer, Yakubu Ahmed said he would prefer to be on a prepaid meter but the process of procuring is cumbersome. According to him, the Jos Electricity Distribution Company serves him N4,000 in some months and N5,000 in some other months irrespective of supply and consumption.
In the cause of this investigation, up to seven out of the 10 customers that our Abuja correspondent called from Mando- Kaduna, Igando, Lagos, Ibeju Lekki, Lagos, and other different cities in various states across the country, are not on repaid meters. From Gwagwalada, Abuja, a customer, Mrs Ayo
Ibukun, who was asked to narrate her recent experiences, said: “Prepaid meter is not common here.”
To provide customers alternative to the monopoly of the distribution companies, the former Minister of Power, Works and Housing, Babatunde Fashola, had on May 15, 2017, declared four categories of eligible customers in the Nigerian Electricity Supply Industry (NESI). The declaration which permits electricity customers to buy power directly from the generation companies is in line with the provisions of Section 27 of the Electric Power Sector Reform Act 2005 whereby eligible customers are permitted to buy power from a licensee other than electricity distribution companies.
He said: “In exercising the power conferred on him by the said Act, the Honourable Minister of Power, Works and Housing, directed the Nigerian Electricity Regulatory Commission (the Commission) to permit four categories of customers to buy power directly from a licensee other than electricity distribution companies.”
According to NERC, the first category of eligible customers comprises of a group of end-users registered with the Commission whose consumption is no less than 2MWhr/h and connected to a metered 11kV or 33kV delivery point on the distribution network and subject to a distribution use of system agreement for the delivery of electrical energy. The next category of eligible customers said the commission, are those connected to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy?
Another category of customers under the declaration consists of those with consumption above 2MWhr/h on monthly basis and connected directly to a metered 33kV delivery point on the transmission network under a transmission use of system agreement. The NERC explained that the Eligible customers in this category must have entered into a bilateral agreement with the distribution licensee licensed to operate in the location, for the construction, installation and operation of a distribution system for connection to the 33kV delivery point.
It also said, the last category is eligible customers whose minimum consumption is more than 2MWhr/h over one month and directly connected to the metering facility of a generation company, and has entered into a bilateral agreement for the construction and operation of a distribution line with the distribution licensee licensed to operate in the location.
The target of the directive, from the commission’s point of view, is to bring into play new and stranded generation capacities which may be contracted between generation companies and eligible customers. The declaration further provides that at least 20 per cent of the generation capacity added by the existing or prospective generation licensee to supply eligible customer must be above the requirement of the eligible customer and is supplied under a contract with a distribution or trading licensee at a price not exceeding the average wholesale price being charged electricity distribution companies by the Nigerian Bulk Electricity Trader Ltd. The conditions for the declaration of the eligible customer is subject to review by the Nigerian Electricity Regulatory Commission from time to time.
On January 7, the Transmission Company of Nigeria (TCN) said it successfully transmitted an enhanced all-time peak of 5,552.80MW recorded by the power sector on Wednesday, January 6th 2021, at 8.15 pm. General Manager, Public Affairs, Ndidi disclosed this in a statement. It noted that “this latest all-time peak transmitted, surpasses the last peak generation of 5,520.40MW which was also effectively transmitted by TCN on the 30th of October, 2020 by 32.40MW.”
According to TCN “The new peak is an indication of the gradual but consistent growth in the capability of the power sector under the present administration. With the capacity to transmit 8,100MW, TCN successfully transmitted the enhanced peak through the nation’s grid at a frequency of 50.08Hz.”
The Ag. MD/CEO of TCN, Engr. Sule Abdulaziz encouraged all sector players to work together to ensure sustained improvement in the power sector. TCN, he said, has continued to build more substations as well as install additional transformers in various substations nationwide. It is also restringing old transmission lines to further increase their capacity to transmit more bulk electricity for Discos nationwide. As at date, he said, TCN can efficiently wheel increased generation through the national grid.
But the question is whether the TCN feat is sustainable? Has it steadily increased the energy it transmits to the DisCos? On the other hand, have the DisCos raised the quantum of power they send out to the customers? Have they stopped rejecting load so that the GenCos can produce what has been stranded? What is the real situation of the market? How have they fared?
4,609.4mw was the energy that was sent out as of January 8, 2021, according to the January 9, 2021 report of the Nigerian Electricity System Operator (SO). It is a subsidiary of the TCN.
The daily report reads: “OPERATIONAL REPORT OF 09/01/2021. Peak Generation on 08/01/2021 5,352.6MW, L0west Generation 08/01/2021 4,057.1MW, Energy Generated on 08/01/2021 112,394.29MWHr, Energy Sent Out on 08/01/2021 110,625.82MWHr, Generation at 06:00Hrs on 09/01/2021 4,421.1MW, Highest System Frequency on 08/01/2021 50.49Hz, Lowest System Frequency on 08/01/2021 49.46Hz, Highest Voltage Recorded on 08/01/2021 350kV,
Lowest Voltage Recorded on 08/01/2021 300kV, National Peak Demand Forecast: 28,850.00MW, Grid Generation Installed Capacity: 12,954.40MW,
Generation Capacity: 7,652.6MW, Transmission Wheeling Capacity: 7,300MW, All-Time Peak Generation Ever Attained: 5,584.40MW, Maximum Daily Energy Ever Attained 115,067.78MWH.”
Had the eligible customer regulation worked out, most of the customers would have skipped the distributors to purchase energy directly from the generation companies. Therefore, the gap between generated energy and energy sent out would not be stranded.
But President, Nigeria Consumer Protection Network, Barrister Kunle Kola Olubiyo, told The Nation on phone at the weekend that the regulation has been dormant. Speaking to our Abuja correspondent on phone, he said “it is in place but it is dormant. There are no follow up actions by the regulator that made the law to enforce compliance. If you have a law and there is no compliance, it is no law. There are no sanctions for non-compliance. The DisCos are not complying with the GenCos.
But confirming whether the regulation is still in force from the commission, Head, Media Unit, Mr Michael Faloseye told The Nation the “the Eligible Customer Regulation is still in force. I will need to confirm the numbers to you.”
Without further investigations, were this regulation enforced, most industrial customers would have jumped at it. But its dormancy continues to pave the way for the DisCos to consolidate their monopoly in the electricity market.
The commission and distributors invented a consolation that was a soothing balm for the customers while reviewing the tariff last year. They said they exempted the masses from the hike. Meanwhile, the masses have been groaning that what they pay through estimated billing is exorbitant than the energy they consume.
Despite the commission’s order that capped estimated billings, the NERC on June 9, 2020, queried the seven DisCos including Enugu, Eko, Benin, Ikeja, Kano, Kaduna and Port Harcourt for exceeding the ceiling. The outcome of the matter is now under the carpet.
This narrative is the condition under which the commission approved a minor Multi-Year Tariff Order (MYTO) for the DisCos taking effect from January 2021. It conveniently reposed on its statutory power to carry out biannual tariff review. Although the Minister of Power, Engr. Saleh Mamman has said the tariff is suspended till the end of January, pending deliberation with the organised labour, it will rear up its ugly head sooner or later.
This has made its analysis a necessary evil despite the suspension and rebuttal from the commission. The reports were not creations of the reporters. They emanated from the NERC Order (NERC/125/2020 on the Ibadan Electricity Distribution Company (IBEDC). The reports were from different perspectives. While some said it was a 50 hike, others simply found a way around the per cent increase and said NERC approved tariff increase for DisCos, others said NERC hikes tariff by 100 per cent. The different angles were all rooted in the verisimilitude of semantic, facts and figures from the same commission.
For instance, the refutal from the commission that was titled “Public Notice on Tariff Purported 50% Tariff Increase,” worsened the information it was released to manage. Part of the rejoinder reads: “It said: “In compliance with the provisions of the Electricity Power Sector Reform Act (ESPA) and the nation’s tariff methodology for biannual minor review, rates for service bands A, B, C, D and E have been adjusted by N2.00 to NG4:00 per kWhr to reflect the partial impact of inflation and movement in foreign exchange rates.”
Where is the source of confusion?
The reporters computed their percentage change from the adjustment from N2 to N4 per kW-hr. When an adjustment is doubled, it is changed by 100 per cent, not 50 per cent and the evasive measures of a percentage that could state it clearly. But the next day, that turned out to be a joker. A public notice advert stated the message correctly saying: “In compliance with provisions of the Electric Power Sector Reform (EPRSA) and the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted at between NGN2.00 to N4.00 per kWhr to reflect the partial impact inflation of and movement in foreign exchange rates. Therefore, the difference between “to” and “between” is accountable for the situation. But one obvious fact is that whether there was an adjustment or increase in whatever proportion, there a tariff hike that took effect from 1st January 2020.
Meanwhile, that is not all. The suspended tariff is not yet cost-reflective, according to Association of Energy Distributors of Nigeria (ANED), Executive Director, Research and Advocacy, Chief Sunday Oduntan. He told The Nation on phone that “it is not cost-reflective. What they are doing now they are moving gradually towards cost reflectivity.”
The ANED spokesman, who noted that the NERC does not want the cost-reflective tariff to shock the customers, urged Nigerians to be patient for the service to improve than it was.
Oduntan said: “They (NERC and DisCos) don’t want it to be a shock. They don’t want to give Nigerians the actual cost of production at a go. So, they are doing it gradually six monthly. But it will reach a place if only Nigerians can be patient, I see this as a way forward and improvement. It is something that will make the system better than it was.”
The announced suspension from the minister has only postponed the take-off, which may commence in February. For the Federal Government to be fair to the customers, it is proper for the commission to insist on bridging the production gaps in the value chain as factor precedent to tariff review. This would show that although it is lawful to review tariff twice annually, the NERC is regulating with a human face.
