Addressing consumer challenges in Nigeria’s electricity market

The Electric Power Sector Reform (EPSR) Act 2005 empowers the Nigerian Electricity Regulatory Commission (NERC) to provide fair regulation to all stakeholders, including electricity consumers as stipulated in Section 32&36 of the EPSR ACT 2005. This report weighs the prevailing situation in the sector, especially consumer-related challenges. KINGSLEY JEREMIAH writes

A number of regulations have been stipulated to address the challenges being faced or could be experienced by electricity consumers in the country.

Some of the regulations include, reporting of safety issues and or such issues that could lead to power interruptions on distribution network; consumer service standards of performance for distribution companies; connection and disconnection procedures for electricity services; meter reading, billing, cash collections and credit management for electricity supply; customer complaints handling standards and procedures and other aspect provided as Key Performance Indicators (KPIs) embedded in the Performance Agreement (PA) for the Discos.

As detailed as the regulations are, many stakeholders have expressed worry over the state of the power sector, especially the poor treatment of consumers, stressing that NERC only enforces sections that favour some stakeholders.

Established by EPSR, the commission is an independent body designed to undertake technical and economic regulation of the Nigerian Electricity Supply Industry (NESI), NERC is therefore expected to be held responsible for failures in the areas including operating codes and standards, customer rights and obligations and industry tariffs.

Since the privatization of the sector, there has been lingering debates on estimated billing, safety, metering and other issues, which are expected to be met as part of the KPIs of the utility providers.

While Network for Electricity Consumers Advocacy of Nigeria (NECAN), had raised the alarm that over 366 Nigerians were killed by electrocution in 2017, as a result of man-made factors, another 42 persons reportedly lost their lives in 38 fatal accidents caused by faulty systems in the electricity distribution arm of the power sector in the first five months of 2018.

Just recently, two church members were electrocuted during a church service in Egbeda, Osun state. In July this year, a middle-aged man identified as Nduka Emeziagbala, died at Enugwu-Agidi community in Anambra due to electrocution.

Indicating that safety of lives and property, particularly of electricity users are being undermined in the power sector, NERC had in 2014 said Eko, Ikeja and Port Harcourt electricity distribution companies recorded low safety compliance levels, after 49 of their employees lost their lives.

Earlier this year, NERC in an Order no. NERC/GL/269 disclosed that about 12 electricity accidents were recorded within the Abuja Electricity Distribution Company (AEDC) network between 2018 and 2019.

Apart from these life-threatening challenges and against the practices in some advanced countries, electricity consumers in some cases are compelled to bear the cost of procurement and installation of transformers, cost of electric poles, cables and others, which are charges not expected to be borne by electricity consumers under a deregulated regime.

In the first quarter 2019 report of NERC, the 11 electricity distribution companies received 151,938 complaints nationwide. The figure showed an increase in the 136,393 complaints received in the last quarter of 2018.

The report indicated that metering and billing accounted for 61 per cent (92,626) of the total complaints received during the quarter under review as against 47 per cent (63,791) recorded in the fourth quarter of 2018.

In the report, 1,029 customers complained about metering and billing per day during the period, while another issue of serious concern was service interruption, which accounted for 8.5 per cent of customer complaints received in the quarter under review.

Just recently, NERC announced the intention to fully implement the Multi-Year Tariff Order (MYTO) designed in 2015 and the Minimum Remittance Order for the Year 2019. A move, which some stakeholders, insisted amounts to exploitation of consumers, given the shoddy performance of the power sector operators.

Indeed, in the face of the failure of DisCos to install 6.4million meters over a 5-year period as indicated in their KPIs, NERC had earlier the year introduced the Meter Asset Providers (MAPs). The policy, which passed on the responsibility of metering to the consumers has continued to generate criticism.

While consumers’ outcry persists, the foundation issues for most stakeholders is on the state of the sector as consumers are still supplied irregular electricity.

For instance, to Prof. Segun Ajibola, former president of the Chartered Institute of Bankers of Nigeria, said while it remained critical to address these consumers challenges, “Nobody would bother much to pay higher tariffs if the quality of service is commensurate because alternatives to power supply in this country are unbearable to households and businesses.”

Some of the concerns raised by the president, Nigerian Consumer Protection Network, Kunle Olubiyo were on the manner, which NERC reached decisions or overlook consumer related challenges in the sector.

Like other stakeholders, who had accused NERC of being biased against electricity users, Olubiyo noted that there are other areas of the regulatory regime that are not properly enforced, concluding that electricity consumers are being made to bear the burden of the market.

Stressing that NERC needs to change its approach, he added that consumers were suffering from NERC’s negligence.

National President of the Association for Public Policy Analysis (APPA), Princewill Okorie, who insisted that the sector’s regulator, NERC should be blamed for the failure regarding consumers, stated that issues on the reduction in number of customers interruption due to network failures, new customer connection and network faults, improving customer services and complaint handling procedures and others remained in the sector.

“Now, there is what we call customer service standard performance of the distribution company, which NERC developed. That regulation has not been enforced? It is really unjust to push payment of meters to the consumer.

“It is a failure. NERC should even be proscribed. They have failed Nigerians. The regulator needs to live to expectations. While NERC is fair to some segment, the Commission is unfair to some. The Act wouldn’t work if this continues. The investment obligations of the Act are not kept. One is to install 6.4million meters over a 5-year period. How many meters have they installed? What did NERC do?”

“Nigerians are already being exploited by paying estimated bills without approved methodology. The level of exploitation is increasing. DisCos charge reconnection fees that never existed. The tariff review is baseless. It is an extension of exploitation of consumers,” Okorie said.

Reacting to some of the issues, especially the recent agitations on tariff, NERC had said the Commission is working with the Ministry of Power, Works and Housing and other stakeholders to implement innovative ways to address the liquidity gap and other issues militating against improved electricity supply through both regulatory and policy interventions not excluding the appropriate intervention of the Federal Government as was executed in other jurisdictions that have implemented similar power reform programme.

“The Commission in recognition of the importance of protecting the interest of electricity customers has rapidly set up 19 Customer Complaints Forum Offices nationwide with over 10 more in the pipeline to be opened this year.

“The monitoring and enforcement actions have been intensified by the Commission to ensure that the electricity industry operators, especially the DISCO’s comply with the rulings of the NERC Forum Offices and other regulations.

“A lot of the defaulting DISCOs, including the TCN, some GENCOs have been sanctioned by the Commission. Most of these defaulters have either fully paid the fines or applied for reconsideration. These regulatory oversights of the Commission have tremendously increased the rate of voluntary compliance by the electricity industry operators, especially on issues bordering on customer complaints.

“There is no doubt that the electricity sector has not achieved the projected level of improvement due to various reasons that are attributable to the operators’ deficiencies and beyond. These challenges are not peculiar to only Nigeria but also occurred within three to five years in similar forms in all other countries that undertook similar power sector reform,” Head, Public Affairs Department, Dr. Usman Abba Arabi.