The Nigerian Electricity Regulatory Commission (NERC) has announced stringent sanctions against electricity distribution companies (Discos) that commit infractions detrimental to consumers.
NERC stated that it would reduce five percent of the administrative and operational expenditure of any Disco that fails to offtake at least 95 percent of the total energy allocated to it for distribution. This directive was included in the commission’s Order on Performance Monitoring Framework for all Discos.
According to the order, Discos will be assessed on seven key performance indicators: energy off-take relative to partial contracted capacity; revenue recovery rate; compliance with reporting of a uniform system of accounts; compliance with API feeder streaming; compliance with the order on capping of estimated bills; compliance with the implementation of forum decisions; and compliance with service standards for the resolution of complaints received through the NERC contact centre and NERC headquarters.
The order specified that failure to offtake up to 95 percent of available nominations in any month would result in the issuance of a rectification directive. Furthermore, if a Disco fails to offtake up to 95 percent of available nominations in two out of three months in any quarter, a downward adjustment of the Disco’s guaranteed administrative operational expenditure (Admin OpEx) by five percent will be enforced for the next quarter.
Additionally, for any instance of customer overbilling, 10 percent of the naira value of the total overbilling for the period will be deducted from the Disco’s annual Admin OpEx allowance during the next tariff review. This will also include a credit adjustment for overbilled customers. If the energy overbilled exceeds 20 percent of the allowed cap or if the number of overbilled customers represents more than 20 percent of the unmetered customer base, the commission may take further enforcement actions, including the withdrawal of the Key Performance Indicator (KYL) of the Head of Billing or the officer responsible for the billing function in the utility.
For non-compliance in resolving complaints through the NERC contact centre or headquarters after the expiration of timelines in the Consumer Protection Regulation (CPR), Discos will face fines: N10,000 per day for billing issues, N2,000 per day for disconnection and interruption issues, and N1,000 per day for metering, delay in connection, and voltage issues. After two months of non-compliance, the commission may take further actions, including the withdrawal of the KYL of the head of customer service or the officer responsible for resolving customer complaints in the utility.
The NERC order stated, “During the effective period of Order No. NERC/320/2022, the commission undertook periodic evaluation of the performance of the Discos vis-à-vis the set targets and regulatory interventions were taken in line with the provisions of the order and extant rules of the commission.”
The commission noted that the Discos’ inability to fully comply with all the KPIs contained in Order No. NERC/320/2022 has resulted in their failure to meet operational obligations, widespread customer dissatisfaction, undermined their ability to uphold market discipline, and jeopardized the long-term financial sustainability of the utilities.
“The imposition of the consequential regulatory interventions specified in this Order shall not be construed as a limitation or foreclosure of the power of the commission to impose any other enforcement sanction under the Electricity Act or any other regulatory instrument. This Order is issued without prejudice to the existing obligations and commitment of Discos as provided in executed contracts and extant rules in the Nigerian Electricity Supply Industry (NESI),” said the order signed by NERC Chairman, Sanusi Garba, dated July 5, 2024.
