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Why Eligible customer regulation has not had desired impact – NERC

Electricity

Nigerian Electricity Regulatory Commission (NERC) has said Gencos duplication of power contracts is the main reasons why the Eligible Customer regulation seems not to be working despite the huge potentials it provides.

According to NERC’s Commissioner legal regulatory Licensing Dafe Akpeneye, most Gencos have already contracted all their Power Purchase Agreement (PPA) to Nigerian Bulk Electricity Trading (NBET) now wants into eligible customers transactions which are not financially viable.

“Gencos can’t be paid twice for the same product. They need to go and renegotiate those PPA with NBET to free up the capacity they want to sell to eligible customers.” Akpeneye explained at BusinessDay Energy Series.

He noted that those not affected are already under the Eligible Customer scheme.

NERC latest quarterly report showed no new eligible customer application was received as at Q4 2019 although it noted that it continued with the technical evaluation of 14 existing Eligible Customer applications with a total capacity of 245.455MW.

The contractual framework contemplated in the Eligible Customer regulation is such that the distribution companies, the Transmission Company of Nigeria as well as power producers all stand to generate some revenue depending on the particular class of customers involved.

For the GENCO’s, it seems to be a period of ecstasy, as they can now directly deal with customers and retrieve their tariff by and for themselves. It will enable them deal with large electricity consumers and perhaps solve the illiquidity problem in the power sector for which the GENCO’s have borne the brunt in the past.

For the transmission company, it portends a regime that demands a properly functioning grid, as the eligible customers who fall under the category that have to execute a Transmission Use of System (TUOS) agreement will require at all times that the grid is functioning and reliable, the failure of which will result in consequences and grave penalties.

Under the framework, large scale power users or companies can purchase power directly from generation companies without necessarily going through the distribution companies.