Understanding NERC’s Meter Asset Provider and National Mass Metering Regulation 2021

In a bid to bridge the metering gap, the Nigerian Electricity Supply Industry (NESI) has witnessed several policy transitions within the metering value chain.

The new Nigerian Electricity Regulatory Commission (NERC) Meter Asset Provider and National Mass Metering Regulation, (Regulation) 2021 is a hybrid framework that merges the Meter Asset Providers (MAP) Regulation, 2018 and the National Mass Metering Policy (NMMP). The aim is to ensure the closing of the metering gap through an accelerated roll-out of meters; to eliminate the prevalent practice of estimated billing in the NESI, to attract private investment in the provision of meters/ metering services in NESI, and to enhance revenue assurances at the retail end of the NESI.

Read Also: Power: FG delivers 500,000 meters to Discos, installs 280,000

Framework

The Regulation provides for four major frameworks to enable the Distribution Companies (DISCOs) to meet their metering targets as stipulated by NERC.

They are:

i. MAP Framework

ii. NMMP Framework

iii. Vendor Finance

iv. Self-funded by Distribution Companies

i. MAP Framework

This covers entities already certified as MAPs under the MAP Regulation. For new entrants, a permit is to be obtained from NERC after being approved by DISCOs. The MAP permit is valid for 5 (Five) years and can be renewed subject to the MAP’s satisfactory performance on contractual agreements with the DISCOs.

This framework only allows for upfront payments by customers. As such, customers can choose to obtain their meters under the MAP Framework by making full upfront payment before it is installed. DISCOs are under an obligation to refund or reimburse customers who paid upfront for the meters. The cost of the meter is to be reimbursed through equal installments of energy credits (token) at the time the customer makes a purchase over a period of 36 months. MAPs are required to install meters within 10 days of DISCO’s confirmation of upfront payment by a customer.

MAPs are permitted to import fully built meters. This is subject to the requirement that a minimum of 30% of the contracted quantity of meters to be supplied by MAPs must be sourced locally in Nigeria. The 30% threshold shall be subject to review by NERC based on proven local manufacturing capacity.

ii. NMMP Framework

This framework provides for Local Meter Manufacturers/Assemblers (LMMA) who will be engaged in the manufacturing or assemblage of meters in Nigeria. To be eligible, the LMMA must show that the local manufacturing or assembling process is not less than the assemblage of 6 meter components at factory level in Nigeria. The LMMA must provide evidence of sufficient working capital (including stock of material and/or work in progress) for the manufacture of a minimum of 100,000 (Hundred Thousand) meters annually. Thus, only local meter manufacturers are permitted to participate under this framework.

LMMAs are selected through a competitive bidding process and all contracts for the supply of meters under the NMMP are to be backed by performance bonds issued by commercial banks.

iii. Vendor Finance

The MAP and NMMP frameworks are structured to have the DISCOs pay the MAP and LMMP for meters supplied to customers within their franchise area. However, a DISCO is permitted to mutually agree with an LMMA or a MAP on a deferred payment arrangement. Hence, the LMMA or MAP as vendors will finance the supply of the meters to the customers and the DISCO will pay at a later date.

The base cost of meters under this arrangement shall not exceed the regulated price approved by NERC. Where the cost of financing is in excess of the rate granted by CBN to the DISCOs under the NMMP, the prior approval of NERC must be obtained.

iv. Meter Financing by DISCOs

Here, DISCOs can procure meters from other sources outside the MAP and NMMP framework. However, the DISCOs must provide a basis for seeking out other financing options outside the MAP and NMMP. The terms and conditions of such arrangements must be approved by NERC. In addition, the cost of meters and accessories shall not exceed the regulated price approved by NERC and the terms of supply under the DISCOs arrangement shall not conflict with the existing agreements between the DISCOs and MAPs/LMMP.

In protecting consumers, DISCOs are to carry out periodic inspection of meters to ensure integrity and reading accuracy. This obligation extends to repair and replacement of faulty meters (at no cost to the customer) within 2 working days of receiving a customer’s complaint. Where a DISCO is unable to meet the timeline, the customer shall be strictly billed based on their consumption pattern in the last billing cycle or the existing energy cap of the load cluster. All unmetered customers shall be billed in accordance with NERC’s Order on capping of estimated bills.

Furthermore, where a customer wilfully damaged a meter, such customer shall make an upfront payment for a replacement. In the event of a dispute with the party responsible for destroying the meter, the customer is entitled to dispute resolution mechanism as provided in the metering code. In the interim, the DISCO shall replace the meter pending the resolution of the dispute. Upon replacement of faulty meters, the customer is to be credited with the outstanding energy credit within 48 hours of installation of the new meter.

Customers on the other hand are not to tamper with their meters and are mandated to grant access to their premises for inspection and installation of meters. Failure to comply will lead to disconnection of the customer until access is granted.

Impact of the regulation on the NESI

The provisions of the Regulation are laudable in that they underscore the importance and urgency in bridging the metering gap. This can be gleaned from the fact that DISCOs are provided with various frameworks to carry out their metering obligations. The Regulation will open a new vista for private sector investment in the power sector under the NMMP framework. This is commendable as it gives 100% preference to local manufactures/assemblers. It is also structured to ensure that the local content requirement will not hinder the overall objective of the Regulation in that it makes room for importation of meters by MAPs and allows DISCOs to adopt other arrangements if required.

Another worthy point is that customers are not required to bear the cost of payment for the meters. Customers who have urgent need for meters can apply through the MAP framework and have meters installed in 10 days with refund through energy credits.

In sum, the Regulation will stimulate the flow of investment within the NESI. More jobs will be created and economic activities will be enhanced.

Conclusion

The Regulation is a step in the right direction. However, the successful implementation of these frameworks will depend largely on the ability and willingness of the NERC to enforce the Regulations. Erring players should be called out and sanctioned. On the other hand, parties who meet their metering targets and comply with the provision of the regulation should be incentivized and rewarded.

Ajayi is an expert in Electricity Law and Policy.  https://www.linkedin.com/in/chinenyeajayi