Fearing backlash, DisCo pins tariff hike on NERC, FG

A mild drama is ensuing over how to communicate who is responsible for the tariff increase in the retail price of electricity to Nigerians on the fear of a backlash by customers.

The Enugu Electricity Distribution Company (EEDC)issued an advert on June 24 to inform customers of the price change pinning the responsibility on the Nigerian Electricity Regulatory Commission (NERC), and the Federal Government.

“Following the directive of the Nigerian Electrical Regulatory Commission (NERC), with the approval of the Federal Government, on the planned electricity tariff review which will take effect on July 1, 2020, the Enugu Electricity Distribution Company (EEDC) wishes to notify her esteemed customers of this development,” said a notice from EEDC.

“This review is necessitated considering the inability of the Federal Government to continue to subsidizing the power sector, and also the need for the Nigerian Electricity Supply INdustry (NESI) to continue to sustain its operations and deliver improved services to customers,” the release said signed by the DisCo’s management said.

Shortly after this went out, the regulator, NERC fired a missive at all the DIsCos CEO. “This messaging is completely against the principle of the tariff review being carried out following the applications made by the DisCos to the Commission for graduated rates based on a guaranteed level of service and commitment to continuous service improvement.

“The Commission strongly frowns at this narration and reiterates that it is the obligation of the DisCos and not that of NERC or the Federal Government of Nigeria to communicate the proposed end-user tariff review and planned improved quality of service to customers. Under no circumstance shall reference be made to NERC or the Federal Government in DisCos’ communication to its customers,” NERC said in the letter to the CEOs, seen by BusinessDay.

The Commission reeled fresh set of guidelines for communicating the tariff increase including: That no increase shall apply to customers with low quality of supply;

“The commitment of the DisCo to the implementation of new performance improvement plans to ensure rapid improvement in service quality for customers who currently receive low service and subsequently graduate them to appropriate tariff upon service improvement;

“That the tariff design is based on quality of service.

“The basis for rate review application (changes in macroeconomic indices – forex, inflation, cost of capital, etc);

“Message of hope in meter roll out;

“Efforts at improving responses to customer complaints.

“DisCos may indicate at the bottom of their communication that application for tariff review is subject to approval but is necessary for performance improvement expected by customers.

To reiterate how serious it was taking this matter the Commission said “the minimum communication requirements prescribed by the Commission is a prerequisite for the approval of the tariff and all DisCos must take full responsibility for tariff communication and abide strictly by this principle in their communication to customers.

“Under no circumstance shall reference be made to NERC or the Federal Government in DisCos’ communication to its customers,”

The wording of EEDC advert is clearly to place responsibility for the increase on the regulator and government to clear a path for public outrage expected following a price increase on customers who do not even get sufficient power.

This highlights the difficulty in reviewing electricity pricing in Nigeria under the Multi-Year Tariff Order after assumptions upon which tariff were determined including inflation, gas pricing and exchange rate continues to change pricing play catch-up