With the planned take off of the electricity tariff in February, distribution companies are expected to upgrade their power infrastructure and reduce hazards, the Nigerian Electricity Regulatory Commission (NERC).

In an interview with The Guardian, Acting Head of NERC, Dr. Tony Akah stressed that like electrocutions, excess voltages leading to damage on properties and work safety measures for workers should be top priority.

He noted: “The issue of customer snot forced to buy poles, transformers and other connection accessories should stop.”
He noted also that Discos would be bound by their contractual terms for privatization. He said the Regulatory and relevant agencies of government would now hold the operators accountable for contractual obligations under the Transitional Electricity Market (TEM) framework.

He noted: “The Multi Year Tariff Order (MYTO 2015) as signed takeseffect on February 1, 2016. The Commission has utmost respect for the National Assembly, Judiciary and other bodies and is working towards addressing all concerns. This new tariff which is based on realistic market price will improve the quality and quantity of electricity delivered to customers. It will also provide a fair return on investment for the operators. The tariff Order has a robust customer protection mechanism.”

He attributed the revenue gap on the initial freezing of increment for R2 consumers early last year, collection loss removal and the sanctity of Discos performance agreement with the Bureau of Public Enterprise (BPE).

On the implication for Discos, he noted: “Discos did not have a cost reflective tariff as mandated by the EPSR Act (2005) and as required by their sales and performance agreements. Discos could not carryout necessary investment programme to improve on their network services, reduce system losses and meter all their customers. Discos were rejecting electricity (energy) supplied from generation through the Transmission Company Companies (TCN) due to poor capacity of their networks. Discos were unable to settle market invoice in full for energy received due to tariffs being non cost reflective.”

He also drew attention to what he said was difficulty in enforcing performance standards due to non cost reflectivity of tariffs which he said was the basis for a number of force majeure situations declared by the core investors to BPE.

On the implications of the new tariff on the Transmission Company of
Nigeria (TCN), he stressed: “TCN has been receiving only about 30%-40% of its required revenue from the market due to Discos in ability to settle their invoices in full.

He listed how the Regulator was addressing some of the constraints.
His words: “We want the sector to attain credible cost reflective tariffs by unfreezing R2 tariffs and recognizing revenue shortfall that resulted for the freeze in the Discos’ tariffs going forward from year 2016; reviewed ATC&C (less Ministry, Department and Agencies (MDA) debts recognized in Discos’ tariff and relevant shortfalls accounted for in the tariff from 2016 onwards.

He said the additional capital investment requirements for TCN to meet its obligation to Discos and Gencos were recognized in MYTO-2015, noting also that tariffs were spread over 10 years to manage tariff shock to customers and duly recognize Discos’ under recoveries in the earlier years (2015, 2016, 2017, 2018,) and over recoveries in later years to help liquidate expected borrowings in the earlier years.

He spoke on still penalty for non- compliance with performance contracts after the take off of the tariffs.

His words: “DISCOS shall be penalized for rejecting supply based on its load allocation. Where DISCOS does not take its allocation for any reason other than System Operator’s (SO) instructions, DISCOS shall compensate TCN for attributable loss in revenue. DISCOS will also be compensated by TCN for imbalance in revenue resulting from TCN’s inability to deliver allocated energy due to transmission grid constraints.

“TCN and Discos will be penalized for delays in delivering capital expenditure projects provided for in the tariffs. All willing customers who paid for CAPMI meters must be metered within the time stipulated in the Commission’s resolution or not billed after the 60 days time limit for metering. In the period after the expiration of the 60 days such customers cannot be disconnected.

“In line with the Commission’s Regulation on Meter Reading Billing and Collection as well as Connection and Disconnection Regulation, all new connections must be done strictly on the basis of metering before connection. Any unmetered customer who is disputing his estimated bill would not be expected to pay the disputed bill. He would only pay his last undisputed bill as the contested bill go through the dispute resolution process. “