Fixed N750 Charge: Electricity Consumers Allege Rip-off By DISCOs

By David Ogah and Emeka Anuforo and Temiloluwa Adeoye   |   13 September 2015   |   4:25 am  

Electricity-Meters-Copy

Over N20bn Collected In Two Years

THE Two Electricity Distribution Companies (DISCOs) in Lagos, the Ikeja and Eko Distribution Companies may have collected well over N21 billion from residents in Lagos in the last two years when they started collecting N750 from every home with electricity meters as fixed charge on power consumption. This amount is based on the assumption that each of the houses captured by Lagos State Geographic Information System, which put the total number of houses in the Lagos metropolis in 2011 as 1,194,525, are metered.

The figure of houses in Lagos, based on the figure from Lagos State, is in conflict with the figure from the DISCOs, which claimed to have 1, 118,000 customers in Lagos State, an indication that they have only collectedN20.2bn fixed charge from consumers in the last two years.

While Ikeja DISCO admitted having 716,000 customers, the Eko DISCO said it has 402,000 customers. But other sources have disputed the figure, saying the houses in Lagos, even in 2011, cannot be less than three million, an indication that the DISCOs may have collected well over N54 billion as fixed charge from electricity consumers since their inception

In Abuja, about 350, 000 of about 700,000 total customers in the entire franchise area of the Abuja Electricity Distribution Company (AEDC) or Abuja Disco are without meters, an indication that the distribution company may have collected over N6.3bn fixed charge in the last two years.

Abuja Disco, which covers the Federal Capital Territory (FCT), Kogi, Nasarawa and Niger states, says it is, however, unveiling a scheme to provide meters to most of these customers.

Managing Director of Abuja Disco, Mr. Neil Croucher in an email exchange with The Guardian, noted that the sum of N2bn has been injected into the company with a view to improving its network assets and infrastructure.

“We will install 500,000 meters; 100,000 per annum, for a period of five years after we must have completed the pilot scheme of free meter installation, totaling 35,000 for which Minna in Niger State and Life Camp in FCT have been selected as test areas.”

The fixed charge is being collected from electricity consumers, whether or not they use electricity from the national grid for the period of collection. The controversial retention of electricity fixed charge nationwide has generated a lot of controversy. The complaints cut across Civil Society Organisations, including students, traders and house owners, who labeled the continued collection of fixed charge by the Electricity Distribution Companies, as illegal.

They question the rationale behind incurring fixed charge whether they have supply or not each month. The reality is that if one buys a N1,500 recharge card, for those using prepaid metre, DISCO collects N750 as fee; if you consume N3,000 a month on analog meters, they give you a bill of N3,750.

Electricity consumers have freely expressed their grievances against DISCOs on the contentious fixed charge of N750, which they tag “illegal and extortionary.” Also included on the list of grievances was failure to supply pre-paid meters already paid for, estimated billings without meter, and poor power supply, even when customers pay monthly electricity bills.

Nigerians have therefore called on the Nigerian Electricity Regulatory Commission (NERC) to discontinue the collection, describing it as nebulous, exploitative and fraud.

The civil society groups argued that the fixed charge should not be an incentive for companies to perform their primary duties or improve on their distribution network. NERC has been at pains to explain the rationale to Nigerians without success, especially as they have seen only marginal improvement in the availability of electricity needed to ameliorate their pains.

The attention of the Senate was drawn recently, when they asked NERC to abolish the fixed rate. The directive was the result of a motion sponsored by former governor of Ebonyi State, and now Senator, representing Ebonyi North Senatorial District, Sam Egwu, who described the fixed rate as “Unfair Trade Practices of Electricity Distribution Companies in Nigeria.” He urged the Senate to compel the abolition of the fixed charge component of the electricity bill, calling it fraudulent and extortion of consumers. The motion was unanimously adopted. The Senate had earlier quarried the commission over the matter. It asked the commission to explain the rational behind the fixed rate, even when there is no consumption.

Reacting to the query by the Senate, Sam Amadi, chairman, NERC, announced that power consumers, who do not receive electricity supply would no longer pay fixed charges.

The Senators had, in the query, asked NERC to explain the basis for the DISCOs inclusion of a monthly fixed charge of N750 in the electricity bills of domestic consumers and others.
They also requested for an explanation on the practice of estimated electricity, as well as payments made by consumers for meter installation in their homes.

Amadi stated that although the fixed charge component was not illegal, the Commission had been able to intervene in the matter.

The NERC boss told The Guardian last week that his commission was in consultation with electricity consumers on the matter.

“In recognition of the negative impact of the fixed charge, the Commission has held several public consultations to ascertain a measure that will guarantee financial viability in the industry and not expose consumers to paying for electricity not consumed.

“Based on the intervention of the Commission, the distribution companies have agreed to find a way to restructure the fixed charge such that a consumer, who does not receive electricity supply, does not pay the fixed charge. This remodeling of the fixed charge will be part of the ongoing tariff review process being conducted by the distribution companies. NERC will continue to ensure that whatever model is presented for approval is fair and reasonable, and ensures the survival of the new electricity market and improves quality of supply to consumers.”

He explained that in as much as the charge was a standard industry practice across the globe, the case of Nigeria was judged by the legacy problem of poor electricity generation capacity.

Amadi, who with difficulty has been in pain defending the DISCOs had said that; “Electricity consumers in Nigeria pay both the fixed and energy charges. While the energy charge is for the actual amount of power consumed, the fixed charge is to recover the capital and fixed cost incurred by the various operators in the industry.”

The Commission, however, made it clear that abolishing the fixed charge component of the electricity tariff would adversely affect the entire system, especially with regards to investments to upgrade the system.

On whether the DISCOs are at liberty to slash the fixed rate, He said, “it is also possible to reduce or even scrap the fixed charge.” According to him, DISCOs could develop or restructure the charge in a way to allow them recover their investment. “That is why they are allowed to consult with their constituency, after which, the Commission can then factor customers’ concerns to ensure that the charge is fair on both consumers and DISCOs.”

The DISCOs said that they would have no option than to comply, if the government decided to scrap the fixed rate, provided it is enforced on all of them.

Nigerians have however, not taken the explanation from NERC seriously as they argued that the fixed rate has been a financial burden on the people. They are asking the Senate, which is probing the power sector to put its foot down on the ill practices of the DISCOs.
Christopher Olanipekun, a Lagos based Architect said he was looking up to the planned hearing by the Senate for him to present a position paper on the matter. According him NERC has not told Nigerians the truth about the fixed charges.

“ How can the Commission say they are charging the fixed rate to recoup their investment? Nigerians should smell a rat in that statement. You can only recoup your investment by making profit from efficient service and not by collecting free money for service not rendered. The Commission should be probed for supporting this illegality. The DISCOs are only empowered by law to issue bills for electricity used at each consumer’s supply address at regular intervals. The bill has to be based on electricity consumed, either with prepaid meter or with analog meter. So you can only be charged for that which you use. The law never provided for charging citizens fixed fees like DISCOs are doing,” he said.



  • Bello Barriga

    ARRANT NONSENSE. Just consider DISCO argument – recouping investments. Disco must refund money collected. Where on earth can one reap what was not sowed? Some households have lost memory
    of when last they flip a switch for electricity supply, but are paying the fixed charges. Can Mr. Amadi explain that situation? Simply, it has no other name, but EXTORTION, and it is one dimension in the crusade on CORRUPTION by the present administration.

    • okonofua okonofua

      Amadi is talking rubbish. He has been aiding and helping fraudulent activities for the past two years. Iam sure they all get their share of the loot.

      • maris

        Each time l pay that money it reminds me of how fraudulent people can be and the government is not doing anything about it.ls this administration also corrupt as the past ones?

        • ukoette ibekwe

          Maris, why do you continue to pay for services that you don’t receive?Why do our people think that the rich will fight for their cause. In the history of human kind the rich have seldom fought the cause of the downtrodden.

  • ogbemi monday

    PMB shuld beam his search light on d discos activities bcos it amount 2 daylight robbery,diabolical policy n xploitaion 2 collect money without rendering any service.PMB shuld take a cusory look at d terms of agreement reach btwn GEJ govt n d discos company considering d financial malfeasance that characterize GEJ regime culminating in heavy donations 4rm d so called buyers of PHCN during electioneering campaign activities.

  • Perrymarvis2014

    Look at how shallow Sam Amadi argument is. Until that Man goes, the exploitative tendencies of the Discos will continue unabated. He is a beneficiary of the criminal acts of the Discos.

  • Diodemise M. Abele

    Every house pays #750 monthly for Darkness. It is time we Nigerians unite to fight Injustice perpetuated by selfish rulers.

  • NERC – REGULATING IN
    WHOSE INTEREST? – By Idowu Oyebanjo

    What
    exactly is happening in the Nigerian electricity Supply Industry (NESI)? Whose
    interests are the leaders serving? Whose interest are the operators of the weak
    electrical network serving? And most importantly, in whose interest is NERC
    regulating the industry? These questions have remained with us for a long time
    now. Each time one examines these questions, more questions come to the fore.
    Was Nigeria ready for privatisation? Does Nigeria realise that the management
    of electricity systems is highly technically intensive and would need
    individuals who know their onions to mediate the course? Is the regulator aware
    of its role to protect consumers from the regional monopoly of the operators?
    Why has it taken so long, after “unending” complaints from poor and
    already impoverished consumers, before NERC was forced by an order from the 8th
    Senate to carry out what is supposed to be its main function? Why should
    consumers be pushed to the wall before a revolution occurs? Why should
    government wait until a huge crisis of discontent from millions of individuals
    – North, South, East or West, united in one voice, unleash mayhem on public
    utility and public officers because of years of neglect and mismanagement of
    funds meant to provide electricity for the nation? Why is Nigeria yet to have
    electricity which was discovered over a century ago?

    It
    is widely accepted that regulation, where it is impossible to have competition,
    as is the case with the distribution of electricity through wires, is a
    veritable means of providing quality service at low cost to service users. This
    is true but so much depends on the regulator. The principal role of a regulator
    in a privatised electricity system is to cater for the interest of the
    consumers in such a way that operators can make reasonable profit without
    exploiting the consumers. In this regard, NERC has failed Nigeria woefully in
    recent times. Why do we say this?

    There
    is ample evidence that NERC has orchestrated a villainous act against customers
    in the area of estimated billing and fixed charges. In effect, NERC has raised
    money for the distribution companies (DISCOs) from the pocket of already
    impoverished Nigerians. With NERC unable to account or monitor how much money
    has been “borrowed” from individual consumers, this act of treachery
    is daylight robbery. Take for example the Credited Advance Payment for Metering
    Implementation (CAPMI) programme. It is advanced robbery! The CAPMI jargons is
    simply for exploiting consumers. The CAPMI scheme was to provide a platform for
    willing consumers to pay the cost of the meter and get the meter installed
    within 45 days. Also, the distribution company was to return the payment made
    by the consumer via a percentage deduction in their monthly electricity bills
    until the distribution companies repaid the consumer for their advance payment.
    It is regrettable that consumers have paid for these meters and years after,
    they are yet to receive their meters. This is double jeopardy considering that
    these meters were supposed to have been supplied to consumers free of charge in
    the first place. For the avoidance of doubt, the electricity meter is the
    property of the distribution company! NERC is unable to account to date for the
    number of consumers who have paid but are yet to have their meters nor can they
    articulate a means of monitoring the return (with interest) of payments made by
    consumers as promised by distribution companies when the proposal was muted in
    the first place. No one is looking after the interest of the consumers!!!!

    A
    close examination of the components which make up the tariff payment by
    Nigerians as stipulated by the multi-year tariff order 2 (MYTO 2) shows a
    significant amount attributed to the cost of losses. This is a deliberate act to short-change the
    consumers because of their lack of awareness and understanding of Power
    Systems. How can you pay for the cost of losses which cannot be accounted for?
    The distribution companies to begin with are yet to know their Assets as they
    claim. They have been unable to determine their losses yet they are being paid
    for these losses. They have not metered the customers, yet they are being paid
    for aggregate technical, commercial and collection losses (ATCC). The use of
    bogus language and profligacy to confuse the generality of consumers who do not
    understand the meaning of Megawatt is pulling the wool over their eyes.
    Worldwide over, consumers are never interested in the details of Power Systems.
    One thing and only one thing interests consumers anywhere in the world – the
    availability of electricity! A survey of developed countries of USA, UK and
    Europe shows this fact too. The role of an efficient regulator is to protect
    the interest of “disinterested” and disenchanted consumers. Power Systems is
    hard enough to understand for power engineers, not to talk of the wider
    citizenry whose businesses and activities differ extensively. For NERC to have
    allowed distribution companies to extort consumers for this long through the
    estimated billing conundrum tells the whole world of power systems that it is
    serving the interest of the cartel behind the woes of the power sector. As long
    as those who are in charge of the power sector have no clue about the technicalities
    of power systems, the hope of having an efficient and robust power system will
    remain a mirage for a distant future.

    In
    one of its latest misdemeanour, NERC suddenly jolted consumers with the idea of
    negotiating with the distribution companies before any increases in tariff can be
    approved. Insult upon injury! This is a total begging off from one’s duty.
    Observed on the face of it, this looks like a brilliant idea. However, this is
    no brainer for those of us who understand how current flows. Apart from the
    obvious fact stated earlier that consumers know less about the concept of
    electricity, and care less by the way, this is the role of the regulator. The
    regulator should as a matter of course include in the regulatory order an
    incentive for distribution companies to engage the consumers and include this
    in the regulatory mechanism. These guys don’t understand how to run an
    electricity supply business, and rightly so because we are not used to putting
    square pegs in square holes.

    When
    asked recently to explain why we are experiencing improvements in power supply,
    NERC has stated that poor project management skills have contributed to their
    dismal performance in times past. Anyone can come up with an excuse for not
    doing something at anytime. The problem with that is we cannot move an inch in
    power system in this way. Says the NERC chairman, “we now realise we need
    to pay closer details to the details of the electricity market, the issue of
    gas, metering, legacy debts etc”. A lot of putting the cart before the
    horse. What is the guarantee that this will not be the lame excuse they will
    offer us after another ten years? How on earth was it possible to build
    gas-fired power stations without provisions made for gas pipelines to carry gas
    to such thermal power stations?

    It
    is no wonder then that the many cases of wanton killings and electrocution of
    Nigerians reported daily to NERC have not been investigated and dealt with
    according to the provisions within the electricity act. I believe NERC will
    continue allow Nigerians to be killed because it lacks understanding of how to
    run the show. Take for example the fight NERC put forth against the
    establishment of the Nigerian Electricity Management Services Authority (NEMSA) Act. This shows clearly that the regulator
    does not understand its role. More than that, it betrays the general lack of
    understanding of power systems in Nigeria today. Nigeria needs a holistic
    appraisal of the power system and how it should function. The opportunity is
    there now to develop the power system in a way that meets the objectives of
    today and the aspirations of tomorrow in the areas of design, infrastructure
    development, installation, policies, and
    regulation. Since we have come this late, it is best to get it right once and
    for all time. There is need for seasoned Electrical Power Engineers of Nigerian
    origin with a minimum of five to ten years of cognate experience in the
    business of electricity supply within and outside Nigeria to lead this course. The
    government may have to provide electricity as a social service for some time at
    least to palliate consumers who have remained in darkness for so long.

    Idowu
    Oyebanjo is a Power System Professional from the UK

  • Okeke

    IT IS A CLEAR CASE OF CORRUPTION TO COLLECT N750 FIXED CHARGE IN ADDITION TO CHARGING CONSUMERS FOR ACTUAL POWER CONSUMPTION

  • peaceometer

    I suggest the rate be reduced if they can scrap it until electricity is stable and the charges pass through national assembly.

  • emmanuel kalu

    Fixed charge is something done across the world. it is a charge that regardless of if you use any power, there is still a cost to having the ability to get power when you need it. however in the case of nigeria, it doens’t work, because power is not supplied. so it needs to be ended. a good way for this companies to this would be, to meter their customers, then charge a fixed cost along with the power used. so ifg you don’t get any power, you don’t pay the fixed cost.

  • Naijalova

    I will love to ask Amadi what percentage of the 750 Naira comes back to him through the back door, because there no rational defending this extortion by DISCOs, if it’s for capital expansion, then power supply must be improvement in power supply, but it’s the same excuse, low level of water at the dam vandalism of the pipeline,etc
    He is probably afraid that he is on his way out because of the presidents Tsunami
    God bless Nigeria

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