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New regulations, same practice: Plight of electricity consumers without meters

By Femi Adekoya (Lagos) and Kingsley Jeremiah and Oludare Richards (Abuja)
04 March 2020   |   3:42 am
Experiences of electricity consumers across the country are generally alike, with the plight of customers being the high price paid for inadequate and in many cases, non-existent service. Consumers have seen bills increase by as much as 100% with no subsequent service improvement.

Until the recent effort to repeal existing billing regulations of 2012, Nigerian electricity consumers had been at the mercy of distribution companies who offer less or nil service for a ‘standard practice’ of estimated billing. With the new order capping estimated billing expected to become operational, there are worries that the rules may be circumvented, except metering becomes mandatory. FEMI ADEKOYA and KINGSLEY JEREMIAH write.

Experiences of electricity consumers across the country are generally alike, with the plight of customers being the high price paid for inadequate and in many cases, non-existent service. Consumers have seen bills increase by as much as 100% with no subsequent service improvement.

Efforts by the Nigerian Electricity Regulatory Commission (NERC) to address the concerns have proven less effective as NERC recently expressed concerns that the number of electricity consumers has risen to over 10 million within seven years, with about 52 percent being invoiced on estimated billing.

The Speaker, of the House of Representatives, Femi Gbajabiamila, had expressed concerns about the practice of estimated billing, by sponsoring a bill to criminalise estimated billing of electricity consumers by distribution companies. The bill was passed last year October.

When the proposed law is concurred with by the Senate and assented to by the President, it will become criminal for service providers to issue estimated bills, also known as ‘crazy bills’, issuance of which would attract either a one-year jail term or a fine of N1m or both.

The proposed law would also compel a distribution company to provide prepaid meter to an applicant within 30 days, while barring the Discos from disconnecting the consumer after the 30-day period within which meter should be installed.Pre-empting the outcome of the bill when it becomes a law, NERC, last month, repealed existing billing regulations to address the concerns.

Indeed, 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.It is on this note that some stakeholders lauded the move by NERC to cap estimated billing in the country N1, 872 per month, especially for customers under the residential and commercial category that distribution companies fail to meter.

But the many historical challenges, which have hindered effective implementations of NERC’s policies, evidenced in poor outlook of the nation’s power despite being privatised, have continued to create misanthropic opinion for most stakeholders, who noted that lack of enforcement would toss out the aim of the policy.

NERC had in an order released late February and titled, “Order on the capping of estimated bills in the Nigerian Electricity Supply Industry (NESI),” repealed Estimated Billing Methodology Regulation, stressing that the regulation shall cease to have effect on unmetered customers in the country.

Chairman of the NERC, Prof. James Momoh had in January said the new regulation to enforce metering for electricity consumers would favour consumers and as it will stop electricity DisCos from fleecing their customers through the old regime of estimated billing.NERC said: “A customer of XYZ Disco resident in White Acre under R2 (single phase) tariff class has an energy cap of 78kWh per month and NGN24/kWhr. The maximum that XYZ Disco con invoice such a customer is 78kWhr x NGN24/kWhr NGN1,872.00 per month.

The regulator however said customers must note that energy consumed for the purpose of estimated billing is capped during the transitional period until they are metered, adding that the actual amount payable shall vary in the event of any approved tariff reviews affecting their customer class.

According to the commission all R1 customers, who by definition consume no more than 50kWhr of energy per month, shall continue to be billed at NGN4/KWhr and maximum of NGN200 per month unless amended by an Order of the Commission.“The energy cap prescribed by the Commission shall only apply to R2 and Cl customers. All other customers on higher tariff classes must be metered by Discos no later than 30 April 2020, failing which these customers are not liable to pay any estimated bill issued by the Disco. Any customer on such higher tariff classes not metered beyond 30 April 2020 shall remain connected to supply without further payment to the Disco, until a meter is installed on the premises under the framework of MAP Regulations or any other financing arrangement approved by the Commission,” NERC said.

Prior to this regulation, a number of regulations have been stipulated to address the challenges 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.

To underscore how critical the challenge of metering and discretionary billing of consumer is, in the first quarter 2019, a report published by NERC showed that 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 percent (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.

To most stakeholders, who stressed that the sector is failing not because there are no necessary regulations but implementation, the new order by NERC capping estimated billing of electricity consumers might fail due to poor implementation, education, awareness and other inherent factors.

While some stakeholders lauded the move, the industry players were, however, cynical if the plan would be successful, saying that the document lacks proper enforcement plan.

National President of Association of Public Policy Analysts (APPA), Princewill Okorie, said NERC had historically failed to properly implement policies, especially aspect that directly affects consumers.Okorie, who insisted that the sector’s regulator 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.

According to him, releasing an order without proper plan for enforcement, education and public enlightenment, especially at the grassroots, may not achieve projected objectives.Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, also raised concern over the implementation plan, stating that most consumers are not aware of their rights.

Ogaji said the current order had no monitoring template to ensure DisCos’ adherence to the plan, adding: “Who will enforce it.”While the development may empower consumers, she said the change could only come if consumers know and understand how to enforce their rights.However, Director, Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, Prof. Adeola Adenikinju, said move was a good development, saying: “It will force distribution companies to accelerate the process of providing meters to consumers. The distribution companies have used the umbrella of estimated bills to take advantage of consumers.

Group Managing Director, Sahara Power Group, Kola Adesina, whose group operates Nigeria’s biggest generation company, the 1,320-Megawatt (MW) Egbin Thermal Plant, in Lagos, as well as the Ikeja Electricity, argued that there is no way the distribution companies (DisCos) can recover cost under the prevailing electricity pricing and still be able to meter the customers.

He said: “Government, instead of spending trillions upon trillions every year, can pull N500billion out and meter everybody. Meter all Nigerians with the N500billion, and let that be said to be its 40 per cent share in the business.”

He argued that inappropriate pricing has reduced the power sector to the blame-game syndrome since its privatisation almost seven years ago, noting that even though GenCos hare producing more power and Discos selling more to consumers, the impact has not been felt.

This is because, “the population is increasing and the infrastructure is decaying, arising from the fact that the investment required to make the system work has not been triggered due to inappropriate pricing.”

He continued: “There is a cost structure associated with electricity supply. In that cost structure, you find gas, generation, transportation, and distribution. Now the distribution side of it, which is what you want me to speak to, the cost there includes and is not limited to metering, billing, monitoring, cash collection, transformer, lines, the feeder, and the substation. If I’ve built this humongous infrastructure for me to validate what you’ve received and the revenue I am receiving, when my revenue is not commensurate with the energy that I’ve dispatched, then there is a problem. What that simply means is that there is an additional cost required for me to get it right.”