The Nigerian Electricity Regulatory Commission (NERC) has taken action against 11 Electricity Distribution Companies (Discos) operating in Nigeria due to their failure to adhere to the cap on estimated bills for unmetered customers across the nation. In pursuit of its mission to uphold a just and effective electricity market, the industry governing body took a step in 2020 to impose a restriction on the fees that a distribution company could impose on customers without meters until they were equipped with one. The NERC, in its announcement, explained that instituting this cap would safeguard unmetered consumers while also motivating the Discos to expedite the process of metering these particular customers.
According to an official statement, the regulation addresses the recognition that distribution companies have failed to properly measure the electricity consumption of unmetered customers ever since the transfer of the network to the preferred bidders on 1st November, 2013. Consequently, this has resulted in excessive billing for customers, which is particularly problematic during times of limited electricity supply. To enforce compliance, the NERC has issued a statement imposing a fine of ₦10.5 billion. A surface-level analysis of the misconduct committed by each individual Disco indicates that they possibly defrauded Nigerian electricity consumers to the staggering extent of ₦105.05 billion within the first nine months of 2023.
10% of the total over-billing to be deducted from their OPEX.
As per the analysis, Abuja Electricity Distribution Company (AEDC) overly charged unmetered customers an astonishing ₦17.8 billion. Similarly, Eko Distribution Company (EKEDC) surpassed its usual limit by a staggering ₦13.137 billion. In the case of Port Harcourt Electricity Distribution Company (PHEDC), the excess amounted to ₦14.187 billion, while Kaduna Electric overcharged unmetered customers by ₦1.145 billion. Lastly, unmetered customers of Yola Disco were unfairly billed ₦541.88 million. Kano electricity Plc reportedly overcharged its unmetered customers a staggering amount of ₦196.9 million.
Alongside imposing a 10 percent penalty on the utilities, NERC instructed the Discos to fully reimburse the customers and ensure their future compliance. Just like other power distribution companies, Eko Disco has been cautioned by the commission that in order to prevent future non-compliance, a deduction of ₦1,413,766,176, representing 10 percent of the total over-billing from January to September 2023, will be added to its operational expenses (OPEX) over a 12-month period. This deduction will be implemented during the upcoming tariff review.
Credit adjustments required for over-billed consumers.
Recall that in 2020, the commission made a noteworthy move by issuing an order (Order No: NERC/197/2020) to put a limit on estimated bills. Following this, they also introduced monthly energy caps with the intention of equating the estimated bills for customers without meters to the actual energy usage of customers who have meters on the same supply feeder. NERC noted that the Discos’ billing of unmetered customers for the year 2023 has violated the monthly energy caps set forth by the commission, as mentioned in their official statement.
To ensure that customers without electricity meters are protected from unfair charges imposed by Discos, the commission issued an order (No: NERC/2024/004-014) in accordance with Section 34(1)(d) of the Electricity Act 2023 (EA), which addresses non-compliance with the limitation on estimated bills. According to the official statement, in the upcoming billing cycle of March 2024, Discos are required to give credit adjustments to all their customers who were over-billed and do not have meters, covering the time span from January to September 2023.
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By March 31st, 2024, it is mandatory for the discos to disclose the names of credit adjustment beneficiaries through two national newspapers and their official website. Preventing any further violation of the commission’s approved energy caps, a total of ₦10,505,286,072 will be deducted from the annual allowed revenues of the 11 discos during the upcoming tariff review. The commitment of the commission to ensuring regulatory compliance and consumer protection within the Nigerian Electricity Supply Industry remains steadfast, the statement added.