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NERC issues tough sanctions against DisCos over blackout



Gencos Power Supply Electricity Nigeria

The Nigerian Electricity Regulatory Commission (NERC) has rolled out touch sanctions against DisCos that commit infractions capable of inflicting pain on consumers.

NERC, among other things, stated that it would reduce five percent of the administrative and operational expenditure of any electricity distribution company that failed to offtake at least 95 percent of the total energy allocated to it for distribution.

This was disclosed in the commission’s Order on Performance Monitoring Framework for all the DisCos.

According to the order, DisCos would now be assessed on seven key performance indicators—energy off-take relative to partial contracted capacity; revenue recovery rate; compliance with reporting of a uniform system of accounts; compliance with API feeder streaming; compliance with the order on capping of estimated bills; compliance with the implementation of forum decisions; and compliance with service standards for the resolution of complaints received through the NERC.

The order stated that failing to off-take up to 95% of available nominations in any month would result in the issue of a rectification directive.

However, failure to off-take up to 95% of eligible nominations in two of the three months of any quarter will result in a 5% reduction in DisCos’ guaranteed Admin OpEx for the next quarter.

Furthermore, if a client is overbilled, 10% of the naira value of the total overbilling for the period will be taken from DisCo’s annual Admin OpEx limit during the next tariff review, with credit adjustments made for overbilled customers.

“If the energy overbilled is greater than 20 percent of the allowed cap or the number of customers overbilled is greater than 20 percent of the 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.

If the DisCo fails to resolve complaints through the NERC contact centre or headquarters within the time frames specified in the CPR, the DisCo will be fined within the first month: billing: N10,000 per day; disconnection: N2,000/day; interruption: N2,000/day; metering: N1,000/day; connection delay: N1,000/day; voltage: N1,000/day.

After two months of noncompliance with the consumer complaint resolutions, the NERC 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.”

The commission noted that the DisCo’s inability to fully comply with all of the KPIs contained in Order No. NERC/320/2022 has led to the failure of the distribution companies to meet their operational obligations, widespread customer dissatisfaction, undermined their ability to uphold market discipline, and jeopardised the utilities’ long-term financial sustainability.

“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.”