THE Nigerian Electricity Regulatory Commission has issued a warning to electricity distribution companies (DisCos), stating that they may face penalties if they do not utilize at least 95 percent of the total monthly energy allocated for distribution.
In a directive titled “Order on Performance Monitoring Framework for all DisCos,” the commission outlined strict sanctions that will be imposed on utility firms that violate regulations that could harm electricity consumers.
According to the order, any DisCo failing to take up at least 95 percent of the total energy allocated to them for distribution each month will face a reduction of five percent in administrative and operational expenditure.
Failure to meet this requirement will result in corrective measures such as a 5 percent reduction in guaranteed Admin OpEx for the following quarter.
NERC specified that DisCos will be evaluated based on seven key performance indicators, including energy off-take in relation to contracted capacity, revenue recovery rate, compliance with reporting standards, adherence to billing regulations, adherence to service standards, among others.
The commission emphasized that non-compliance with these Key Performance Indicators (KPIs) has hindered the DisCos from meeting their operational responsibilities, resulting in dissatisfied customers and threatening the utilities’ long-term financial stability.
“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 NESI,” said the order signed by the NERC Chairman, Sanusi Garba, and dated July 5, 2024.
For non-compliance to the resolution of complaints through the NERC contact centre or headquarters after the expiration of timelines in the CPR, the DisCo would be made to pay fines within the first month -billing: ₦10,000 per day; disconnection: ₦2,000/day; interruption: ₦2,000/day; metering: ₦1,000/day; delay in connection: ₦1,000/day; Voltage: ₦1,000/day.
After two months of noncompliance to the consumer complaints resolutions, the order stated that “The commission may take other enforcement 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 that 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.”
On overbilling, NERC said 10 per cent 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, and credit adjustment for overbilled customers.
“If the energy overbilled is greater than 20 per cent of the allowed cap or the number of customers overbilled represent is greater than 20 per cent of unmetered customer base, the Commission may take other enforcement actions including the withdrawal of the KYL of the Head of Billing or the officer responsible for the billing function in the utility.