Power distribution companies in Nigeria have been warned by the Nigerian Electricity Regulatory Commission (NERC) that they will face penalties if they do not comply. NERC has made it clear, being the voice of the federal government on this matter, that it intends to enforce regulatory measures against the power companies due to their load rejection. According to regulations, the law mandates that the power distribution companies bear the financial responsibility for the power offload that has been declined.
The Nigerian Electricity Regulatory Commission (NERC), acting on behalf of the federal government, has voiced its dissatisfaction with power distribution companies in the nation for their refusal to accept the electricity load, resulting in widespread blackouts. NERC issued a warning, expressing its intention to implement necessary regulatory measures against the Electricity Distribution Companies (DisCos) due to their inability to meet the key performance index (KPIs) regarding electricity consumption. This action was taken as a result of the notable disparity between the amount of power available and the level of demand from customers.
DisCos are obligated to either purchase or pay for power on the PCC.
In its Q3 2023 quarterly report, the commission disclosed that the Partially Contracted Power, which came into effect in July 2022 under the partial activation contract regime, outlines the specific amount of energy that DisCos must offload at any given time. According to a report, the regulator has clarified that under the new system, DisCos are obligated to either purchase or pay for power on the PCC. This means that they may have to pay for power that is available, even if they do not use it.
According to the NERC report, the arrangement adhered to global standards of excellence when it came to obtaining electricity over an extended period and making payments for ensuring power availability. Nevertheless, the commission maintains a vigilant eye over the persistent issue of numerous Distribution Companies (DisCos) consistently failing to comply with their full Performance Completion Criteria (PCC). The reasons behind this inadequacy range from technical restrictions to Discos intentionally refusing to bear the load, predominantly driven by commercial motives relating to substantial losses in specific regions.
To monitor performance framework, NERC incorporates load offtake.
Also, in order to address and discourage this behaviour, NERC decided to incorporate load offtake as a significant parameter within its KPI Order for the monitoring of performance framework. This directive will apply to power distribution companies (DisCos) starting from October 2022. The directive given by NERC states that if certain levels of persistent load non-offtake are exceeded, it may lead to regulatory measures being taken against the management of DisCos found to be in violation.
Additionally, the NERC report highlighted that during the third quarter of 2023, DisCos experienced an average energy offload of approximately 3,253.83MWh at their trading points. This figure indicates a slight rise of 0.08% compared to the 3,251.31MWh/h offload observed in the second quarter of 2023. According to an article too, the Nigerian Power Regulatory Commission (NERC) has granted approval, resulting in a surge in the cost of pre-paid electricity meters across the country. Electricity distribution companies have recently stirred up discussions.
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These discussions are various speculations surrounding their proposed imposition of a 40% tariff increase. These companies argue that their significant losses, which has attained about 40%, can be attributed to the relentless surge in petrol prices, the unpredictable fluctuations in exchange rates, and the prevailing economic conditions. It is worth mentioning that there has been a submission from a collective of 11 Nigerian electricity distribution companies, requesting a comprehensive evaluation of their current electricity tariffs.