Five years after power sector privatisation, metering still in limbo
The practice of estimated billing in the Nigerian Electricity Supply Industry (NESI) has continued to constitute a major source of complaints by customers in all the electricity Distribution Companies (DisCos). This practice has resulted in growing customer apathy to pay their bills leading to huge unsettled DisCo invoices and calls for urgent metering of unmetered customers and timely reading of customer’s post-paid meters. The Head of Energy $ Solid Minerals Desk, STANLEY OPARA, in this report, examines the inaction of DisCos in terms of metering and the implication it has on the power sector, among other issues.
Prior to the privatisation of the electricity distribution companies (DisCos), the Nigerian Electricity Regulatory Commission had issued a ‘Methodology for Estimated Billing’ Regulations in August 2012 for the following class of customers: Customers without meters; customers with defective meters; and customers whose meters are inaccessible during the billing cycle.
With NERC’s order that all Maximum Demand (MD) customers be metered no later than March 31, 2017, the estimated billing of MD customers was abolished through an order that unmetered MD customers shall not pay for electricity as a means of ensuring that all such customers are metered by the DisCos. However, under the Estimated Billing Methodology Regulations, unmetered non-MD customers shall be billed based on the “weighted average cluster model’ which involves the subtraction of the entire metered load from the energy supplied to the feeder (33kV or 11kV) and the application of an appropriately determined availability factor and correction of losses, which is aggregated among the various number and classes of customers supplied by the feeder.
But the commission, from reports generated in the course of its monitoring exercises, recently said the implementation of estimated billing based on its applicable regulation, has not been strictly complied with by all the DisCos.
The challenge of implementing the guidelines of the regulations has further been exacerbated by the widespread inadequate metering of distribution transformers and feeders, thus placing a considerable burden on unmetered customers who ultimately are exposed to unacceptable level of estimated bills that were, in most circumstances, not objectively determined. Other technical challenges in implementing estimated billing methodology include the non-integration of billing platforms for the purpose of determining the estimates of energy consumed by customers with prepaid meters and lack of relevant benchmarks and reporting on minimum supply and load shedding data.
What the regulation says
The Electric Power Sector Reform Act (2005) mandates NERC to, among other things, create, promote and preserve efficient industry and market structures and to ensure the optimal utilisation of resources for the provision of electricity. The act further mandates the commission to ensure that prices charged for electricity are fair to consumers while allowing the utility to recover efficient costs and earn a reasonable return on investment.
But the practice of estimated billing in the industry has prevailed, and is now perceived in some quarters to be the toast of the DisCos. The level of metering gap in the industry currently, has been identified as an evidence that most DisCos are not fully committed to addressing the anomaly and closing up the metering gap.
The recent effort of the National Assembly to legislate against the practice of estimated billing reflects the public concerns relating to the inadequate end-use meters for electricity customers and flagrant abuse of the estimated billing process for both post- paid metered and unmetered customers.
In pursuit of eliminating the practice of estimated billing for unmetered customers in the NESI, the commission approved the Meter Asset Provider Regulation (MAP) with the main objective of fast-tracking the rollout of end-use meters for all consumers thus ensuring that customers pay for only what they consume. The implementation timeline for closing the metering gap is within three years, hence the need to address the concerns of customers during the transitional period.
The MAP regulation is without prejudice to the obligation of the DisCos to provide specified volume of meters under the terms of the Performance Agreement (PA) executed between the respective core investors and the Federal Government of Nigeria.Section 31 of the MAP regulations provides that the commission shall, within 90 days of coming into effect of the regulation, develop an order for the capping of estimated bills as a strategy of mitigating the concern of electricity consumers and to further incentivise electricity distribution companies to expedite the provision of meters nationwide.
Where we are
The Performance Agreement executed between the Bureau of Public Enterprises (BPE) and the core investors in the eleven (11) DisCos provide for the installation of end-use meters based on agreed targets. However, the actual performance as at August 2018 indicates that about every six in 10 customers are unmetered and therefore, subjected to estimated billing.
The report puts unmetered electricity customers in Nigeria at 57 per cent. With a customer population of 8,292,840, only 3,591,168 customers are metered, leaving out 4,701,672 customers.Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt and Yola DisCos metering levels are respectively put at 46 per cent, 38 per cent, 52 per cent, 67 per cent, 59 per cent, 51 per cent, 65 per cent, 72 per cent, 75 per cent, 40 per cent and 79 per cent.
Regrettably, the above metering statistics have not adjusted for faulty meters and inaccessible post paid meters that are also billed based on estimation.
It is noteworthy that the key objective of the MAP regulations is to close the above metering gap within three years of the completion of the procurement process by the DisCos.Similarly, as at the end of June 2018, NERC said about 45 per cent of the total 7,476,856 registered customers have been metered by the 11DisCos in the country Of the total 7,973,867, registered active electricity customers, only 3,547,129 were metered; which means 55.5 per cent of end-user customers were still on estimated billing methodology.
In comparison to the preceding quarter, the number of registered customers increased by 9.32 per cent, while the metered customers increased by 3.3 per cent, the electricity regulator noted.NERC said the increase in registered customer population was as a result of the ongoing customer enumeration by DisCos, adding that: “It is evident that only four DisCos, namely Abuja, Benin, Eko and Port-Harcourt have metered not less than 50 per cent of their registered customers as at the end of the second quarter of 2018.”
The commission said the exercise had helped DisCos to properly register individuals who have previously consumed electricity through illegal connection to the networks. It, however, said in spite of growth in the number of metered customers, total meters deployed by DisCos during the quarter was significantly lower than the expected quarterly metering deployment under the performance agreement.But the Chief Executive Officer, Ikeja Electric, Dr. Anthony Youdeowei, said metering had become contentious in recent time as some customers were still unwilling to pay, hence, the bypassing of meters by some customers that have been metered already.
He recently told some senators who came for an oversight function in the company that banks had refused to open letters of credit for some DisCos, and were unwilling to give loans, which could have helped the companies to acquire meters.Also, the Managing Director/Chief Executive Officer, Eko Electricity Distribution Company, Adeoye Fadeyibi, said the company was looking at becoming one of the first DisCos to achieve 100 per cent metering of its customers.
But he noted that issues like non-reflective tariffs, insufficient capital expenditure, inflation and foreign exchange risk, remained a huge setback for the DisCo.
Also, the Head, Corporate Communications, Ikeja Electric, Feklix Ofulue, confirmed to The Guardian that the DisCo had completed the final stage of its metering mapping programme, but awaiting NERC’s approval before implementation. NERC in its 2018 second quarter report published on its website said: “Whereas the performance agreement with the Bureau of Public Enterprises (BPE) envisaged deployments of 1,640,411 per annum, that is quarterly average of 410,103, only 113,126 meters were installed by DisCos during the period under review.’’
On customers complaints, NERC said DisCos nationwide received a total of 153,227 complaints as against 108,871 complaints received in the first quarter of 2018. It said the proportion of the number of complaints resolved by DisCos reduced to 61.2 per cent from the 66.9 per cent recorded in the first quarter.
Benin DisCo had the highest number of complaints followed by Ikeja DisCo, on the other hand, Yola DisCo recorded the lowest number of complaints. Yola, Kano, Jos and Abuja DisCos recorded a higher rate of over 90 per cent of complaints resolved, reflecting better performance in dealing with customer complaints compared to other distribution companies.
To this end, a customer based in the Ojodu area of Lagos, Ayobami Ojo, said DisCos were unwilling to meter customers because if that happened, huge revenues accruable to them via estimated billings would be affected.He said it was unfortunate that people using prepaid meters and having more load to power, pay less than their counterparts without prepaid meters and less load.
According to Samuel Eyi, another customer based in Ikeja area of Lagos, the NERC is also culpable as it has failed to ensure DisCos do not arbitrary bill customers, adding that it appeared that DisCos were now unwilling to meter their customers despite wide complaints.Corroborating this, NERC said the customer complaints centred on service interruption, poor voltage, load shedding, metering, estimated billing, disconnection, delayed connection, among others.
The majority of the DisCos received huge number of complaints on each of the afore-mentioned key issues; but NERC, however, said Jos and Kano DisCos received just one complaint each on load shedding, while Jos and Yola DisCos had one complaint each on delayed connection.It said metering and billing still dominated the customer complaints, resulting in 68 per cent of the total complaints received during the period under review, adding: “This implies that on average, about 1,152 customers complained about metering and billing per day. Another issue of serious concern is service interruption, accounting for 14 per cent of the total customer complaints received.’’
To this end, the Managing Director, Mojec International Limited, Chantelle Abdul, expressed the company’s desire to work closely with operators to find lasting solutions to the metering problem in Nigeria.She stated that the current facilities and factory on ground were capable of producing meters from start to finish, adding: “This factory has provided enough proof that local companies can produce meters that can meet global standard.“The Federal Government should assist local manufacturers by formulating policies that would encourage cheap financing which could go a long way to make meter accessible to the people.”
NERC said it has established 25 forum offices across the country for effective adjudication of customer complaints. On market remittance, NERC said the liquidity challenge in the Nigerian electricity supply industry continued to manifest during the period under review. This it said was evidenced in the DisCos’ level of remittances of electricity invoice for energy received to the Nigerian Bulk Electricity Trader (NBET) and the Market Operator (MO).
It added that: “During the second quarter of 2018, the DisCos were issued a total invoice of N161.4billion for energy received from NBET and for the administrative services by MO. But only a sum of N53.7 billion of the invoice was settled, creating a total deficit of N107.7 billion.’’
According to NERC, a comparative analysis of market performance by DisCos in the second quarter of 2018 indicated an overall settlement rate of only 30 per cent of the market invoice; of which none of the DisCos exceeded a threshold settlement of 50 per cent of its market invoices in the quarter. It said Jos DisCo recorded the worst remittance performance of 10 per cent, adding that the commission was presently reviewing the viability of the DisCo as a going concern.
Consumers count losses
It’s been tales of pains and bitterness for most electricity customers in Nigeria in recent years, and issues bordering on metering have continued to dominate the market. Narrating his ordeal, a pensioner resident in the Okokomaiko area of Lagos, Pa Emeka Anaba, said his average monthly electricity bill is higher than his monthly pension.
Anaba, who lives in a two-bedroom bungalow, gets electricity bill between N15,000 and N17,000 monthly, but receives N12,000 as his monthly pension.He said: “Now, all my earnings go the electricity company, which are not even enough. I still use part of the money my son sends to me monthly to augment sometimes. This is nothing but oppression because I have always asked for prepaid meter, which I know will reduce this bill. “One of my friends, who is also a retiree, lives in a four-benroon apartment, and uses more gadgets than I do. He pays roughly N2, 500 monthly because he has a prepaid meter.”
Another customer residing at Ejigbo in Lagos, Olakunle Amao, said: “I used to have an analog meter and officials of my DisCo used to come and read it. Suddenly they stopped reading it, telling me the meter has started malfunctioning. “From that point, they started bringing estimated bills that were six/seven times the bill I used to pay. One thing I don’t understand is: Is it not the DisCo’s responsibility to sort out the issues with my meter?”Another customer resident in Magodo area in Lagos, had her bill increased from N2, 398 to N13, 436.43 between May 2016 and January 2019 (with reduced consumption).A customer, who identified himself as Chigozie, said at Ologometa, Akute, where he currently lives, the DisCo in charge only meters customers who are willing to pay handsomely for the prepaid meters. According to him, the meters are sold to the highest bidders, as metering is done randomly.
NERC advises DisCos
The Regulation on Connection and Disconnection Procedures provides that consumers should only be connected to electricity supply upon the installation of an appropriate meter. However, the terms of the privatisation transaction for the DisCos acknowledges the legacy metering gap hence provided for the installation of a specified number of meters under the Performance Agreement over a period of five years. With the ongoing enumeration of customers, it is envisaged that many more consumers would be brought on the billing platforms of the DisCos.
The power sector regulator, in its last report for 2018, said tracking the rollout of meters for both energy accounting and appropriate billing of end-use customers is a key prerequisite for the recovery of NESI. In consideration of the need to mitigate customer apathy about estimated billing during the transitional period of the provision of the meters under the MAP Regulations, the commission proposed to develop a regulation that puts a cap on estimated bills that electricity distribution companies may charge different classes of customers.
The Minister of Power, Works and Housing, Babatunde Fashola, had directed the NERC to immediately step in to ensure that DisCos improve on their distribution equipment and increase capacity to enable them to optimise the use of electrical resources by the electricity generation companies (GenCos).The minister also directed NERC to enforce the contract of DisCos to supply meters and act to ensure the urgent speedy supply and installation of meters with a view to eliminating estimated billing, and promote efficient industry and market structures.
Fashola, who said the improvement in DisCos’distribution equipment and increase in capacity would enable them to take up the available 2,000 megawatts (MW) difference between the generation capacity of the GenCos and the distribution capacity of the DisCos, also directed the regulatory commission to stop DisCos from threatening private entrepreneurs from entering the market to supply consumers whom they are unable to supply.
Instead, according the minister, such entrepreneurs should be licensed by the commission subject to its terms and conditions.In order to promote competition and private sector participation and avoid a private monopoly of power, as clearly stated in Section 71(6) of the Electric Power Sector Reform Act (EPSRA) dealing with Terms and Conditions of licenses, the minister explained that “no exclusivity or monopoly was intended for a license holder such as GenCos or DisCos.”
NEMSA to the rescue
Owing to the huge metering deficit that had prevailed years after the privatization of the power sector by, the Federal Government, the last quarter of 2018, charged the Nigerian Electricity Management Services Agency (NEMSA) to come up with innovative measures that will help reduce the number of unmetered power users across the country.The government, considering the over six million metering gap with respect to consumers of electricity in Nigeria, admitted that the glitch had impacted negatively on operators in the sector.
Fashola had also asked the agency to do more in implementing its mandate by exploring other opportunities that would help address the lack of meters in the industry, saying that the lack of meters was limiting the progress recorded in the electricity generation and transmission arms of the sector.The first element of NEMSA’s mandate is to ensure that electrical materials, equipment and instrument used in the Nigeria electricity supply industry are of the right quality, standards and specifications.
The minister said: “NEMSA must go further because the power sector is one of those industries where, unless everything is done, you don’t see the benefits.
“I am sure it is public knowledge that customers all over the country are agitated by estimated bills. This is why the ministry is putting pressure on power distributors to please accelerate their meter roll-out.”