All the 11 electricity distribution companies (DISCOs) are to forgo about N10.51bn from the annual allowed revenues during the next tariff review, the Nigerian Electricity Regulatory Commission (NERC) has announced.
The deductions are a part of regulatory sanctions imposed on the DISCOs for non-compliance with the Order on Capping of Estimated Bills approved by the Commission.
In 2020, the Commission issued Order No: NERC/197/2020) on Capping of Estimated Bills, which amended a previous order issued in February 2020.
Under the order, DISCOs were required to meter their customers following requisite standards of performance. However, due to the legacy situation at the time of their acquisition of the company from the government, the majority of the customers were unmetered, even as the customer population continued to grow from 5 million in 2012 to over 10 million as of December 2019, with about 52 percent of the population invoiced based on estimated billing.
To curb the menace of crazy bills to customers, NERC introduced a standard methodology of estimated billing in the NESI, to ensure customers were not issued arbitrary bills that were unrelated to actual consumption or any other metric for estimating their energy consumption.
Consequently, customers with faulty meters, or those whose meters could not be read as well as existing customers with meters were to be issued monthly energy caps aimed at aligning the estimated bills for with the measured consumption of metered customers on the same supply feeder.
Under the order energy caps of unmetered end-use non-maximum demand customers were supposed to be computed based on weighted averages of prepaid and postpaid metered end-use customers based on actual consumption data of those customers from feeder and distribution transformers, while all unmetered non-MDD customers were to be billed for the consumption of energy beyond the cap stipulated in the order.
Also, non-MD customers under the tariff bands D and E whose tariffs have been frozen were to have their tariffs computed using corresponding tariff rates of R2 and C1 under the previous tariff classification.
However, NERC said a review of the DISCos billing of unmetered customers for 2023 revealed serious non-compliance with the monthly energy caps issued by the Commission.
To safeguard unmetered customers from arbitrary billing by DISCos, NERC announced the issuance of an Order on Non-Compliance with Capping of Estimated Bills (Order No: NERC/2024/004-014) under the provisions of Section 34(1)(d) of the Electricity Act 2023 (EA 2023).
The Order stipulates that DISCos must issue credit adjustments to all overbilled unmetered customers for the period January to September 2023 by the March 2024 billing cycle.
Besides, the Order directed all DISCos to publish the list of credit adjustment beneficiaries in two national dailies and on their website no later than March 31, 2024.
As a deterrent to future non-compliance with the approved energy caps, the Commission announced regulatory sanctions against the 11 DISCOs in the form of a deduction of N10,505,286,072 from their annual allowed revenues during the next tariff review.
The Commission reaffirmed its commitment to regulatory compliance and consumer protection within the Nigerian Electricity Supply Industry (NESI).
