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Electricity Companies Ordered To Install Meters Or Stop Charging New Tariff

The Nigerian Electricity Regulatory Commission – NERC has issued a 14-day ultimatum to electricity distribution companies (DISCOs) that are in violation of its Order to submit a list of all customers who paid for meters since January 2011, and commence metering them with immediate effect.

“Any DISCO that does not comply with this new directive will be barred from collecting the new electricity tariff”, Chairman/CEO NERC - Dr. Sam Amadi says.

In a letter dated 19th July, the Commission expressed its utter dismay that all DISCOs have been in complete violation of the order as it relates to customers who have made payments within the given time frame, and have not been identified for immediate metering.
 
“NERC views this conduct as totally unresponsive, and undermining the effort of the reform”- Amadi.

NERC had earlier in the year issued an Order on CAPMI – Credited Advance Payment for Metering Implementation. CAPMI was a response by the regulator to address the lingering issue of non-issuance of meters by the electricity companies. CAPMI allows for any interested and willing customer to advance money to their electricity distribution company and in return will be given electricity credit until the cost of the meter has been recovered by the customer.

The CAPMI Order, amongst other things, stipulated that all distribution companies forward to NERC data of all customers who paid for meters but had not been supplied.

It can be recalled that in 2011, a N2.9billion metering intervention fund was made available to the companies with a view to closing the unacceptable metering gap. One year after, no appreciable progress was made by the companies, and this compelled NERC to demand for performance reports from the DISCOs. Eight of the twelve DISCOs submitted reports that fell far short of the requirements of NERC. The rest did not submit any report of how they spent the money.

The DISCOs were further warned that failure to comply with the 14-day ultimatum would also compel the Commission to institute enforcement procedures that may result in the removal of a Chief Executive Officer of an electricity distribution company.


Maryam Yaya Abubakar - Assistant General Manager, Media
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Promoting Fair and Reasonable Pricing of Electricity - Statement by Dr. Sam Amadi – Chairman/CEO at a Press Conference by the Nigerian Electricity Regulatory Commission, Monday, 15th July, 2013

The Nigerian Electricity Regulatory Commission (NERC) has noted the comments of Nigerians on the recent increase in the fixed charges for some class of customers, including a story in today’s ThisDay attributing comments to the President of the Nigeria Labour Congress, Comrade Abdulwaheed Omar, that centred around a purported arbitrary increase of an unstated and undefined charge from =N=225 to =N=700 Questions have been asked as to why such ‘increase’ at this time and the rationale for charging fixed charges for electricity consumption.

As a responsible regulator we are committed to respond to the concerns raised by consumers in print and electronic media and through social media. We consider it of utmost importance to always explain to the consumers that the tariffs they pay are fair, reasonable and necessary to guarantee continuous improvement in electricity supply to Nigerian homes and businesses.

Has NERC Increased the Tariff Again?

NERC wants to make it clear that since 1st June 2012 when the second edition of the Multi Year Tariff Order (MYTO 2) came into force, it has conducted two Minor Reviews and published its findings on 1st December 2012 and 1st June 2013, as required by the law. A Minor Review under the Multi-Year Tariff Methodology published by NERC in 2012 involves an examination of interest rates, exchange rates, inflation rates and available generation capacity during the preceding 6 months; and if these report a change of plus or minus 5% individually, such change will be applied to the tariff published for each distribution company.

The two Minor Reviews conducted by NERC did not result in any increase of tariff because the indices stated above and the fundamentals of the MYTO, as shown in the Methodology and the financial model available published in full on NERC’s website have not significantly changed. We must state that the commencement and results of both Minor Reviews were announced via various national print and electronic media, including some that have carried various provocative statements that bear absolutely no connection with the truth.

The changes that some customers have belatedly noticed in their electricity bills were announced by the commission on 1st June 2012.  The MYTO stipulates tariffs for the 5-year period from 1st June 2012 to 31st May 2017 based on the expected cost of generating, transmitting and distributing the electricity for homes and businesses during these years. This means that the tariff order issued to every distribution company has an approved tariff for 2012, 2013, 2014, 2015 and 2016. Except there is a Minor Review of the MYTO, which takes place semi-annually, with results announced on 1st December and 1st June each year, each distribution companies is authorized to collect only the approved tariff announced by NERC. An examination of the tariff tables for the respective eleven (11) distribution companies that were nationally published last year shows all the tariffs for the period 2012 – 2017. The total electricity tariff paid by all consumers in Nigeria comprises a single monthly fixed charge and a variable energy charge that is based on consumption.

It must be made clear that for residential customers who use either single-phase meters or three-phase meter (R2), the fixed charge approved under MYTO is N500 for 2012 and N700 for 2013. Accordingly, on 1st June 2013, their fixed charge changed from N500 to N700 as prescribed in the MYTO. This happened without any further action from the commission.

NERC is committed to the highest standards of accountability and transparency. The MYTO was designed and executed with utmost transparency and full participation of relevant stakeholders. Several public hearings and consultations were organized in Abuja and Lagos to afford consumers and other stakeholders the full opportunity to participate in tariff setting, which many stakeholders took advantage of. In addition, NERC arranged and held special meetings with those organized groups, including residents associations, estate developers, small and medium scale enterprises, industrial and commercial interest groups and trade unions that reciprocated our genuine effort to engage with them. We note that, particularly, the Chairman of NERC made a comprehensive to the leadership of the Nigerian Labour Congress in Jos, Plateau State. 

The financial and technical assumptions of the MYTO were validated by relevant public and private institutions, including acclaimed experts and academics. The two Minor Reviews so far conducted have confirmed the soundness of the Commission’s financial and technical assumptions and particularly the fact that as required by Section 76 of the Electric Power Sector Reform Act, Nigeria’s electricity tariffs enable operators to recover the prudent cost of their operations plus a reasonable return on capital.

The Need for Fixed Charge:

The MYTO has two components of tariff for most electricity consumers: the fixed charge and energy charge. In the past consumers paid for Meter Maintenance Fee. The Commission abolished the Meter Maintenance Fee (MMF) in 2011 to make tariff in the industry fair and reasonable. Fixed Charge is a component of electricity tariff all over the world. It is charged to recover some of the capital costs for producing and supplying electricity. In designing the fixed charge NERC ensured that very poor consumers on R1 are not charged fixed charge and that most of the residential consumers are subsidized. The fact is that the current =N=700 fixed charge for R2 residential customers actually recovers only a small fraction of the actual fixed cost of supply. As NERC stated in its Methodology, it permit the recovery of the full cost of the fixed charge only as significant improvements in quality of service are shown.

We agree with all stakeholders that we must ensure the success of the power sector reform. As a regulator we understand that the basis for any sustainable improvement in the networks is that we can attract investment to increase the generation capacity, transmission and distribution network. The reality, which we all know, is that without tariffs that cover the prudent costs of producing and supply electricity in the country there will be no such investment. The ultimate need of the consumers of electricity in Nigeria is that they have access to stable electricity. The objective of the tariff review in 2012 was to ensure cost recovery as a way of guaranteeing stable electricity in the nearest future.

We regret that the distribution companies have not been very committed to meeting their obligations in the MYTO. NERC recognizes that the quality of service has not seen significant improvement, especially in the area of metering and accurate billing of customers. We have responded with regulations to enforce correct billing of unmetered customers and the new CAPMI metering policy. We will continue to enforce these regulations and interventions to improve quality of supply before the preferred bidders take over the networks. Our expectation for significant and sustained improvements in electricity supply and quality of service lies in the expected take-over by the privatisation preferred bidders who have better incentives and commitment and have made enforceable promises to invest continuously in providing better services to consumers. These investments and commensurate improvements will not all be made in one day but over the coming months, years and decades following the entry of new investors and managers of our distribution companies.

Once again, we want to call on consumer groups and civil society groups to get more engaged with the work of the Commission. The Business Rules of the Commission allows any person aggrieved by the orders of the commission to file a proper petition for the review of the order upon proper consideration by the Commission. The small and medium enterprises utilized this provision to request NERC to review the fixed charge paid by small and medium enterprises. This review will shortly become effective. The NLC or any other organized consumer or civil society group can bring similar matters for the consideration of the Commission if they so wish and they will be given a full and fair hearing.

Let us work together to provide stable and reliable electricity to Nigerian homes and businesses. Thank you.

Maryam Yaya Abubakar - Assistant General Manager, Media
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Chairman NERC Backs Freedom of Information Law, Says It Will Improve Quality of Governance

The Chairman of the House of Representatives Committee on Reform of Government, Honorable Mathew Omegara, has described the Nigerian Electricity Regulatory Commission (NERC) as the 'Champion of the Freedom of Information law in Nigeria'.

He made the remarks at the Committee's interactive session with Chief Executives of Ministries, Departments and Agencies (MDAs) of the federal government on Tuesday, July 14, 2013. He praised NERC for being the first agency in Nigeria to publicly begin implementation of the FOI law and the first to proactively make the 16 mandatory disclosures as required by the FOI law. He told the Chief Executives that it was NERC's proactive implementation of the FOI law that goaded the committee to enhance oversight of the implementation of the freedom of information law. He enjoined other agencies to seek advice from NERC on how they can comply with the requirements of the FOI law.

The Committee Chairman further noted that it was in recognition of the leadership role of NERC in providing free access to information on energy regulation that the Committee has selected Dr. Sam Amadi, the Chairman and Chief Executive Officer of the NERC as a resource person and ambassador of FOI to help enlighten and build the capacity of the MDAs to understand how to use the FOI to engender accountability and accountability in public governance. Amadi said that “the whole idea is to create an open government because Freedom of Information greatly improves the quality of governance”.

In his presentation, the Chairman of NERC, Dr. Sam Amadi, listed the various actions undertaken by the Commission in pursuit of the prescriptions of the FOI law, including being the first and only agency in Nigeria to publicly declare a code of conduct that commits every staff of the commission to the highest standards of disclosure and transparency. He further disclosed that NERC has designated a desk officer for the FOI and has trained relevant officers locally and international in other to ensure responsiveness to FOI request. Dr. Amadi assured the Committee that NERC as a regulator would mandate complete disclosures for all licensees in the electricity industry in other to ensure effective energy audit and ensure quality services to the consumers.

On the challenges he has encountered in championing freedom of information at NERC, Dr. Amadi noted that the most difficult challenge is conceptual hurdle because of the erroneous belief that disclosure would do to an organization. He argued contrary that, an open government is more stable and efficient as feedbacks from citizens and customer improve organizational processes and outcomes. He also advised Chief Executives to realize that without transformation in the corporate culture, it would be difficult for their agencies to make the paradigm shift required to fully embrace the FOI law. He promised that he would continue to assist the House Committee on Reform of Government to make FOI a living experience in Nigeria.

Maryam Yaya Abubakar - Assistant General Manager, Media
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NERC Fully Supports Mambilla, Zungeru Hydro Projects

The Nigerian Electricity Regulatory Commission – NERC, wishes to refute a report by a newspaper that the Commission was taking action against the Mambilla and Zungeru power plants. Nothing is further than the truth. The Commission is highly elated that there will be an additional 3,750 megawatts of electricity in the near future from these projects.

The Commission wishes to categorically state that the realisation of an additional 3,750 megawatts of electricity from these projects aligns with NERC’s vision of increase in capacity in the sector.

Licensing is a fundamental requirement for operators in the sector, and this responsibility rests with the regulator. On 10th June, NERC issued seven licenses to National Independent Power Projects under the Niger Delta Power Holding Company. This is in addition to the three licenses issued previously in 2011. In the same vein, NERC requested the Federal Ministry of Power to ensure that the projects were duly licensed. This request was duly acknowledged by the ministry with a view to commencing the process as soon as possible.

NERC is committed to ensuring the growth and sustainability of the electric power sector in Nigeria.

Maryam Yaya Abubakar - Assistant General Manager, Media
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NERC Inaugurates Industry Working Group on the Review of the Uniform System of Accounts for the Electricity Sector

As part of the process of developing a uniform accounting framework to facilitate the review and analysis of the licensees’ financial statements, the Nigerian Electricity Regulatory Commission (NERC) in consultation with the Financial Reporting Council (formerly Nigerian Accounting Standards Board), agreed on the adaptation of the US Federal Energy Regulatory Commission (FERC) 2009 version of the Uniform System of Accounts (USOA).

The draft was discussed with industry participants during two interactive workshops held in November and December 2011 in Calabar and Kaduna respectively.
 
Membership of the working group is made up of representatives from electricity generation and distribution companies. Others are the Nigerian Bulk Electricity Trading Plc and NERC, with technical support from the Nigerian Infrastructure Advisory Fund.

The working group is expected to complete its assignment on Friday 24th May 2013.


Maryam Yaya Abubakar - Assistant General Manager, Media
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NERC hold public consultation on Metering Code

In line with the powers conferred on the Nigerian Electricity Regulatory Commission (NERC) enshrined in the EPSR Act, 2005, a stakeholder consultation on the review of the Metering Code was held on Wednesday, 15 May, 2013 in Abuja.

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NERC Commissions Abuja Forum Office

The Nigerian Electricity Regulatory Commission (NERC) has launched its Abuja Forum Office. The Forum was commissioned by the Chairman, Senate Committee on Power, Distinguished Senator Philip Aduda, who has described the action as a landmark in the march towards the realization of adequate, safe, reliable and affordable power supply across the country.

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NERC: New Metering Scheme Kicks Off Today, Orders Discos To Supply Meters Previously Paid For By Customers

The new metering scheme kicks off today with an official order from the Nigerian Electricity Regulatory Commission – NERC mandating the electricity distribution companies (DISCOs) to commence implementation of the Credited Advance Payment for Metering Implementation – CAPMI.

CAPMI came about due to the slow pace of customer metering by the DISCOs, as well as the high level of complaints received from customers and dissatisfaction with the current estimated billing practices.

CAPMI provides a platform for willing customers to pay the cost of the meter into a dedicated account jointly managed by the DISCO and meter Vendor/Installer.  Once payment has been effected, the customer will have their meter installed within 45 days, by a NERC accredited Vendor/Installer. 

Chairman NERC – Dr. Sam Amadi explained that “The cost of the meters was arrived at using the standard market price plus the most efficient installation costs. The DISCOs submitted data based on costs submitted by the DISCOs during the MYTO review, as well as review of prices supplied by local manufacturers”
In arriving at a list of meter Vendors and Installers of meters to partake in the CAPMI scheme, NERC followed a comprehensive due process by first advertising, and inviting the Bureau of Public Procurement (BPP) to supervise the process of certification based on the Metering Code.

Consultations were also held with various stakeholders including preferred bidders, would be vendors and installers and Electricity Distribution Companies (DISCOs) as well as the financial institutions to agree on the framework and logistics of implementing the scheme. In selecting successful applicants, the Commission gave emphasis to local firms as a way of localizing and promoting local content in the sector”.

In a related development, the Commission has also signed an order mandating DISCOs to supply meters paid for by customers dating back to January 2011. Amadi said: “It is regrettable that customers paid for meters and not supplied with same months even years after. This is a double jeopardy considering that meters ought to have been supplied to them free once they paid bills. The Commission had to take January 2011 as deadline for a number of reasons. Nevertheless we are working on measures to ensure that customers who paid before January 2011 are metered within the shortest possible time”.

Maryam Yaya Abubakar - Assistant General Manager, Media
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Tel: +234 9 462 1408

NERC Issues Guidelines for Derogation from Electricity Codes and Standards

In anticipation of the entry of private sector participants in the electric power sector, the Nigeria Electricity Regulatory Commission – NERC, is in the process of perfecting guidelines that will ensure that operators do not breach their license obligations, and at the same time are able to temporarily operate out of compliance, where the urgent need arises.


The undeniably weak state of the industry that will be inherited by the new players has necessitated this move. There are many flaws, sub-standard equipment, among others in the system which will make it difficult for the new operators to comply with all the standards set by NERC to govern generation, transmission, distribution and overall customer care.


Operators will be able to apply to NERC seeking for time to comply with codes and standards, and then submit detailed plans and timelines for eventual compliance. The Commission will consider these applications, and if found not to impinge on health and safety issues, and are justifiable, derogation may be granted.


The Commission has also called for public comments on a draft health and safety code to ensure the safety of persons during installation, operation or maintenance of electricity equipment.  Members of the general public interested in accessing these documents and making their comments may do so by visiting the Commission website on www.nercng.org.

Alternative Funding for Meters Imminent, Federal Government Instructs NERC to Commence Implementation

Press Release - 11.03.13 - 06

The roll out of electricity meters is set to receive a major boost as the Nigerian Electricity Regulatory commission – NERC gives the go ahead to commence implementation of an alternative funding scheme that will see to the rapid deployment of electricity meters.

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NERC Pledges Fair Wages in the New Electricity Sector Through Fair Regulation

Press Release – 04.03.13 -05

The Nigerian Electricity Regulatory Commission – NERC, at the National Executive Council meeting of the National Union of Electricity Employees – NUEE at the weekend, pledged its commitment to ensure that workers in the electricity sector are treated fairly, and their interests protected through fair regulation.

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NERC to Issue Regulations on National Content

Press Release - 01.03.13 #04

In a move to ensure that the Nigerian electricity industry gives priority to indigenous operators and workers, the Nigerian Electricity Regulatory Commission – NERC is soon to issue regulations on national content.

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Customer Meters: NERC Steps Up Action, Orders DISCOs to Install Meters in 45 Days

Press Release-23.01.12 - 02

Electricity customers are soon to enjoy rapid meter deployment owing to the resolution taken by NERC yesterday at their Commission meeting to issue an order to electricity distribution companies (DISCOs) to issue meters to their customers who have already paid.

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Reprive Underway for SMEs as NERC Resolves to Address High Electricity Bills

Press Release-23.01.13 - 01

Small and Medium Enterprises (SMEs) may soon heave a sigh of relief with regards to the high fixed charges they pay. This is coming on the heels of a resolution taken by the Nigerian Electricity Regulatory Commission – NERC, to conduct a public hearing for SMEs and other stakeholders to contribute to arriving at a more affordable fixed charge in order to ensure the sustenance and growth of this critical sector.

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Electrcity Tariff works, calls for funding of privatised DISCOs unfounded

Contrary to calls and justification for the Federal Government to fund the electricity distribution companies (DISCOs) beyond 2012, there is indisputable proof that this will not be necessary as the tariff methodology in use has provided for these companies to be self sustaining.

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NERC issues deadline for states to conclude electricity assets valuation

The Nigerian Electricity Regulatory Commission - NERC, has given state governments up to the 31st of December 2012 to submit a detailed valuation of their investments in electricity distribution assets.

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