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NERC implements stricter sanctions on Discos to protect consumers

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The Nigerian Electricity Regulatory Commission (NERC) has announced stringent sanctions against electricity distribution companies (Discos) that commit infractions detrimental to consumers.

The regulatory body aims to enhance accountability and improve service delivery within the electricity sector.

In its latest directive, the 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 for distribution.

This mandate is part of the commission’s new Order on Performance Monitoring Framework for all Discos.

The Discos will now be evaluated based on seven key performance indicators (KPIs):

  1. Energy off-take relative to partial contracted capacity.
  2. Revenue recovery rate.
  3. Compliance with reporting of a uniform system of accounts.
  4. Compliance with API feeder streaming.
  5. Compliance with the order on capping of estimated bills.
  6. Compliance with the implementation of forum decisions.
  7. Compliance with service standards for resolving complaints received through the NERC contact center and headquarters.

Failure to off-take up to 95 percent of available nominations in any month will result in the issuance of a rectification directive. Persistent failure to meet this benchmark in two of three months within a quarter will lead to a five percent reduction in the Disco’s guaranteed administrative operational expenditure (Admin OpEx) for the next quarter.

Moreover, instances of customer overbilling will incur severe penalties. Ten 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, with credit adjustments made for overbilled customers.

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If the overbilling exceeds 20 percent of the allowed cap or affects more than 20 percent of the unmetered customer base, the commission may withdraw the Key Performance Indicator (KYL) of the head of billing or the responsible officer.

Non-compliance with complaint resolutions through the NERC contact center or headquarters after specified timelines will attract daily fines:

  • Billing: N10,000 per day.
  • Disconnection: N2,000 per day.
  • Interruption: N2,000 per day.
  • Metering: N1,000 per day.
  • Delay in connection: N1,000 per day.
  • Voltage issues: N1,000 per day.

Extended non-compliance beyond two months may lead to further enforcement actions, including the withdrawal of the KYL of the head of customer service or the officer responsible for resolving customer complaints.

The order, signed by NERC Chairman Sanusi Garba on July 5, 2024, emphasized that during the effective period of Order No. NERC/320/2022, the commission conducted periodic evaluations of Disco performance against set targets.

The evaluations revealed significant non-compliance, leading to widespread customer dissatisfaction and jeopardizing the long-term financial sustainability of the utilities.

The NERC clarified that these regulatory interventions are not exhaustive and do not preclude the commission from imposing additional sanctions under the Electricity Act or other regulatory instruments.

The order reinforces the Discos’ existing obligations as stipulated in their contracts and the rules governing the Nigerian Electricity Supply Industry (NESI).

By enforcing these measures, the NERC aims to uphold market discipline, ensure the financial health of the utilities, and ultimately deliver better service to consumers across Nigeria.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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