Electricity customers in Nigeria are still reporting excessive charges despite an order by the sector regulator limiting distribution companies (DisCos) from charging outrageous bills. Power companies trying to recover losses caused by COVID-19 are passing the cost to long-suffering unmetered customers.
In February, the Nigerian Electricity Regulatory Commission (NERC) issued the Transitional Capping of Estimated Bills issued to Unmetered Customers by DisCos, an order placing a cap on estimated bills that can be issued to unmetered customers, but the regulator has failed to enforce the order, leading to gross abuse.
According to NERC, the order cancelled the Estimated Billing Methodology Regulation as a basis for computing the consumption of unmetered customers by DisCos, capping the maximum bill an average unmetered customer can pay to N1,875.
However, electricity users returned to their offices last month – after being shut for over a month due to government-imposed lockdown to contain the spread of the novel coronavirus – to meet huge bills despite very limited power consumption.
“The estimated billing nonsense really has to stop,” Omobola Johnson, a former minister of communications, said on Twitter. She had been billed N29,000 by Eko Electric for the month of April, even when not turning on a light bulb during the period.
Eko Electric attributed the higher energy charge to increased energy use as families are cooped at home to help flatten the coronavirus curve, but this does not explain how offices that were closed for months still ended up with outrageous bills.
In April, some DisCos wrote to NBET, which manages the money pool in the electricity supply industry, warning that the COVID-19 was having a ravaging impact on their business operations and constrained their ability to pay for the electricity contracted to them to sell and recover cost.
Apart from lower revenue, many businesses were not open on account of the lockdown, leading to lower energy demand especially for industrial customers who pay the bulk of energy charges. Yet, the DisCos continued to take the same volumes of energy supplied prior to the lockdown which they would be required to pay for.
Last month, Funke Osibodu, CEO of Benin Electricity Distribution Company, said on account of COVID-19, DisCos have seen supply disruption, rising cost due to exchange rate volatility, and loss of half of their revenue.
“Our costs have gone up but revenue has gone down, as our industrial and commercial customers have been hard hit leading to fall in demand,” Osibodu said.
Some analysts called for some concessions for DisCos.
Chuks Nwani, an energy lawyer, said the regulator, NBET and the market operator should factor losses arising from COVID-19 when they are making a request for debt settlement from DisCos.
But the regulators have not heeded this call. Rather, some in government began talking about providing free electricity for two months as part of palliatives. The only remedy NERC provided was postponing the commencement date of paying increased tariffs to July.
Yet, the DisCos were being compelled to settle the full cost of the power sent to them. Last month, Abdullahi Abdullazeez, spokesman for Kaduna DisCo, told BusinessDay that the Market Operator was threatening to call the company’s Letter of Credit on account of its inability to fully settle its market invoice.
The DisCos are now passing the cost to the consumers who are unmetered, considering that metered customers only pay for what they use.
NERC’s order capping estimated bills was with the objective of compelling DisCos to meter their customers. According data from the commission, 52 percent of over 10 million electricity customers do not have meters.
The 2007 Meter Reading, Cash Collections and Credit Management regulation, enacted by NERC, empowered DisCos to bill customers by estimation when they are unable to gain access to the customers’ premises. This has, however, become so perversely abused that it is now the single most painful source of frustration for customers, accounting for 65 percent of all complaints lodged at DisCos’ offices across Nigeria, according to NERC’s data.
NERC’s most recent attempt to compel DisCos to meter customers through a Meter Asset Provider regulation, wherein third-party investors buy the meters and resell to customers through DisCos for profit, is unravelling.
NERC said “several constraints, including changes in fiscal policy and the limited availability of long-term funding, have led to limited success in the meter rollout”.
Shortly after the policy took off, the Ministry of Finance imposed a 35 percent tariff increase on meters imported into the country and the Customs Service began enforcing it, heralding the beginning of the end of the programme as investors, already cash-strapped, abandoned thousands of meters at the port, rather than watch what little margins they hope to make eaten up by import duties.
Nigeria does not produce electricity meters, local plants merely assemble parts. The naira devaluation and dollar shortage have severely impacted their businesses, putting paid to the hope of millions of electricity customers being metered.
