Updated: NERC to sanction DisCos for failing to cap estimated bills to unmetered customers

One week after BusinessDay reported that unmetered electricity customers were still reporting excessive charges despite an order by NERC limiting distribution companies (DisCos) from charging outrageous bills, the commission has threatened to sanction erring DisCos.

The Nigerian Electricity Regulatory Commission (NERC) posted on Twitter on Tuesday that the DisCos have 14 days beginning from June 4, 2020 to explain why they should not be sanctioned over their alleged non-compliance with the order.

NERC had issued the directive on Transitional Capping of Estimated Bills issued to Unmetered Customers by DisCos in February, placing a cap on estimated bills that could be issued to R2 and C1 unmetered electricity customers, but it has failed to enforce the order.

The absence of enforcement has led to gross abuse, such that power companies trying to recover losses caused by COVID-19 have continued to pile ‘crazy’ bills on long-suffering unmetered customers.
The pre-existing estimated billing regulation was hampered by the inadequate level of metering of feeders and distribution transformers which form the source data for the effective application of the estimation methodology, according to NERC. Hence the new order cancelled it.

Therefore, the regulator following a public hearing imposed an energy cap on the bill of unmetered customers within a business unit at the average of vending of customers of the same tariff class within the same area.

NERC said the order had the objective to introduce parity in the treatment of unmetered R2 (Residential) and C1 (Commercial) customers with their unmetered counterparts and protect them from arbitrary billing and expedite metering of those in the customer class. According to data from the commission, 62 percent of over 10 million electricity customers do not have meters.

But DisCos are reeling from the impact of COVID-19. In April, some DisCos wrote to NBET, which manages the money pool in the electricity supply industry, warning that 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.

Funke Osibodu, CEO of Benin Electricity Distribution Company, recently 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,” she said.

Some analysts have called for some concessions for DisCos, asking that losses arising from COVID-19 be factored in when making a request for debt settlement from DisCos.

By this threat of sanction, the regulator NERC appears determined to move ahead with sanction.