The Nigerian Electricity Regulatory Commission (NERC)has threatened sanctions against electricity distribution companies or DisCos if they failed to take up at least 95 per cent of the total monthly energy allocated for distribution.
In the Order on Performance Monitoring Framework for all the DisCos issued by the commission, the market operator implemented touch penalties against utility companies that engage in activities that have the potential to cause harm to energy customers.
NERC said that, among other things, it would cut five percent of the administrative and operational costs of any distribution company (DisCo) that did not get at least ninety-five percent of the total energy allotted to it for distribution each month.
According to the order, if up to 95% of the eligible nominations are not taken in a given month, a rectification directive will be issued, which may include a 5% decrease in DisCos guaranteed administrative profit for the next quarter.
As per the announcement from NERC, DisCos will now be evaluated based on seven key performance indicators: revenue recovery rate; energy off-take in relation to partial contracted capacity; compliance with the order on capping estimated bills; compliance with the implementation of forum decisions; and compliance with service standards for the resolution of complaints made to NERC headquarters and the NERC contact center.
The commission observed that the distribution companies’ (DisCos’) failure to fully comply with all of the key performance indicators (KPIs) in Order No. NERC/320/2022 has resulted in a lack of operational performance on the part of the companies, a general dissatisfaction among customers, a weakened capacity to maintain market discipline, and a threat to the utilities’ long-term financial sustainability.
“The commission’s authority to impose any other enforcement punishment under the Electricity Act or any other regulatory instrument must not be understood as limited or forfeited by the implementation of the consequential regulatory interventions indicated in this Order.
The July 5, 2024, order, signed by NERC Chairman Sanusi Garba, stated: “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.”
The DisCo would be required to pay fines within the first month for failing to resolve complaints through the NERC contact center or headquarters after the CPR’s deadlines expired. The fines would be as follows: billing: ₦10,000 per day; disconnection: ₦2,000 per day; interruption: ₦2,000 per day; metering: ₦1,000 per day; delay in connection: ₦1,000 per day; voltage: ₦1,000 per day.
“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 decision said, following two months of noncompliance with the consumer complaints resolutions.
“The NERC order stated that the commission undertook periodic evaluation of the DisCos’ performance vis-à-vis the set targets during the effective period of Order No. NERC/320/2022, and regulatory interventions were taken in line with the provisions of the order and the commission’s current rules.”
Regarding overbilling, NERC stated that at the subsequent tariff review, the DisCo’s yearly Admin OpEx limit will be reduced by 10% of the naira value of the overall overbilling for the period, along with a credit adjustment for overbilled consumers.
