NERC, DisCos fine-tune tariffs hike plan

The National Assembly yesterday objected to the proposed electricity tariff hike in the Nigerian Electricity Regulatory Commission (NERC) and the Electricity Distribution Company (DisCos).
But the Senate and the House of Representatives said the proposed tariff increase should be put on hold to “allow Nigerians to breathe”.

In particular, the House said NERC should compel DisCos to discontinue estimated or arbitrary billing to pave the way for an effective metering plan that can guarantee fairness to consumers.

Yesterday, a meeting of NERC, DisCos and other stakeholders across the value chain meant to deliberate on tariff increase continued in Abuja.

Sources at the meeting hinted that the stakeholders may agree on between 25 and 30 percent tariff increase.

Read Also: DisCos to refund $1.2b to NDPHC for 374 projects
It was also learnt that the Niger Delta Power Holding Company Limited (NDPHC) expected DisCos to refund over $1.2 billion to it for 374 distribution projects.

The Senate urged DisCos to allow communities to recover their cost of buying electricity transformers before asking them to pay bills.

It also urged NERC and DisCos to halt estimated billing by urgently supplying electricity consumers with prepaid meters at affordable rates across the country.

The resolutions of the Senate followed its motion, titled: “Need to halt proposed increase in Electricity Tariff by 11 successor Electricity Distribution Companies (DisCos).”

The motion was moved by Senator Yunus Akintunde (APC – Oyo Central) at plenary.

Following the debate, the Senate called on the Federal Government to intervene and halt the proposed increase in electricity tariff by the Distribution Companies (Discos);

“Urge Nigerian Electricity Regulatory Commission (NERC) to decentralize proposed engagement with Stakeholders scheduled for Abuja to the Six Geopolitical Zones of the Federation for effective participation by all;

“The Senate also urged NERC to thoroughly look into the rate review applications filed by the Discos, taking into consideration the interests of citizens, affordability, and the need for improved service delivery;

Akintunde in his lead debate, said the Senate had observed that the 11 successor DisCos have filed an application for rate review with the Nigerian Electricity Regulatory Commission (NERC).

The request for rate review, according to him, is premised on the need to incorporate changes in macroeconomic parameters and other factors affecting the quality of service, operations and sustainability of the companies.

He said: “It is essential to address the issues of inadequate power supply, metering, and quality of service provided by the Discos. Customers should not bear the brunt of inefficiencies in the power sector.”

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Senators Ekpenyong Asuquo, Jimikuta David, Ipalibo Harry Banigo and Abba Moro supported the motion.

House: NERC should halt estimated billing
The House of Representatives, in a resolution that followed a motion by Afuape Afolabi Moruf, asked NERC to invoke relevant provisions of the law and other extant agreements to penalise DisCos for exploiting and abusing the rights of consumers.

The House also said that the commission should evolve a methodology along with the Distribution Companies to compensate communities, individuals, and other private and public entities for their investments in the distribution network.

The House reprimanded the distribution companies for the abysmal provision of services to consumers, while asking NERC to work and resolve limitations to provide excellent service delivery.

Leading the debate on the motion, Moruf said the Electricity Act, 2023, prescribes a comprehensive and institutional framework to guide the operation of a privatised, contract, and rule-based electricity market, within the ambit of which every participant in the Nigerian Electricity Supply Industry (NESI) must operate.

He said NERC, as the regulator, has to ensure adequate supply of electricity to consumers, ensure that prices charged are fair to consumers and sufficient to allow the finances of Disco’s activities, as well as enable them to make a reasonable profit for efficient operation.

Moruf said 11 Discos were established by the Electric Power Sector Reform Act, 2005, to supply electricity to power consumers with obligations to the respective “Operational Areas”.

He said the distribution companies have the statutory duties to provide for power

transmission facilities and other ancillary services to ensure reliability and support the transmission from generation sites to consumers.

He said the Distribution Companies raked in a whooping N247.33 billion in the first quarter of 2023 as against N232.32 billion generated in the fourth quarter of 2022, representing a rise by 20.81% compared to N204.74 billion generated in the first quarter of 2022 (year-on-year consideration).

However, he noted that electricity supply declined from 5,956 (Gwh) in the first quarter of 2022 to 5,852 (Gwh) in the first quarter of 2023 (year-on-year consideration), despite the increase in earnings.

Moruf alleged that the distribution companies have not demonstrated fidelity toward the social contract with Nigerians, as enshrined in the Electric Power Reform Act, 2005 and the Electricity Act, 2023.

He said they have been inefficient in their services, with condemnable attitudes towards expected investments, abdicating their statutory responsibilities for communities, private and other public entities, despite their humongous earnings, as extracted from the Q1 2023 report of the National Bureau of Statistics on a performance review of the 11 distribution companies.

He said there are complaints by Nigerians, who paid DisCos for electric distribution facilities, including meters, cables and transformers to be installed without conferring ownership to the consumers who can be disconnected without prior notice.

He lamented that NERC has watched helplessly while communities, individuals, and corporate organisations assumed the responsibilities of providing electricity transmission facilities (meters, cables and transformers) where they are either not available or repaired, where the same are faulty even though the Commission can act within the ambit of its own created Service Charter that outlines consumer rights, obligations, expected service levels, and redresses applicable to them.

He said NERC never took any action as DisCos abdicated their responsibilities to communities, individuals, corporate bodies, and public institutions, adding that there was no compensation to ensure an outright refund of these third party investments in the distribution network or a possible conversion of same to electricity credits for the use of these “investors”.

NERC, DisCos meet
On Monday, Abuja Electricity Distribution Company (AEDC), Benin Electricity Distribution Company (BEDC) and Eko Electricity Distribution Company (EKEDC), participated at the stakeholders meeting.

Yesterday, Ikeja Electricity Distribution Company (IE), Kano Electricity Distribution Company (KEDC) also showed up at the parley.

Sources said the stakeholders may agree on between 25 and 30 percent tariff increase.

The source stressed: “Disco presented as tariff increase across band because NERC is yet to take a decision, but I strongly believe that based on various submissions so far, an average of between 25 and 30 percent increase across board is likely to be settle for as increase. But the Commission has the final say on this.”

On July 1, the Discos had proposed a 40 percent tariff increase, following the rising foreign exchange rate against the naira and the deregulation of the petroleum downstream sector.

Besides, the proposed increase was said to be contingent on the 2022 multi-year tariff order (MYTO), which is due for a bi-annual review this month.

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