Shoddy Electricity Tariff Reviews

electricity

Power Plant

Sir: NERC has established that the skyrocketing electricity tariff was informed by huge Aggregate Technical, Commercial and Collection (ATC&C) losses, which were incurred by the electricity distribution companies (DISCOS) and are subsequently passed through to consumers.

It, in fact, reviewed the assumptions in the Multi-Year Tariff Order (MYTO 2.1) and determined that henceforth, it would be inappropriate for distribution companies (Discos) to transfer collection losses to consumers. This intends to electricity tariffs by more than 50 per cent in many places across the country.

However, this NERC mandate has not been obeyed by many discos, especially Enugu Electricity Distribution Company, which has shoddily reviewed or increased tariffs on electricity.
• Iregbenu Paul, Lagos.



1 Comment
  • 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

Related