NERC Threatens Sanctions Against DisCos Over Low Power Supply

The Nigerian Electricity Regulatory Commission has threatened sanctions against electricity distribution companies or DisCos if they failed to take up at least 95 per cent of the total monthly energy allocated for distribution.

In the commission’s Order on Performance Monitoring Framework for all the DisCos, the market operator rolled out touch sanctions against utility firms that commit infractions capable of inflicting pain on electricity consumers.

Among other things, NERC said it would reduce five per cent of the administrative, and operational expenditure of any DisCo that failed to offtake at least 95 per cent of the total energy allocated to it for distribution monthly.

The order stipulated that failure to off-take up to 95 per cent of available nominations in any month will attract issuance of a rectification directive, such as a downward adjustment of DisCos guaranteed Admin OpEx by 5 per cent for the next quarter.

The NERC said DisCos would now be assessed on seven key performance indicators -energy off-take relative to partial contracted capacity; revenue recovery rate; compliance with reporting of a uniform system of accounts; compliance with API feeder streaming; compliance with the order on capping of estimated bills; compliance with the implementation of forum decisions; and compliance with service standards for the resolution of complaints received through the NERC contact centre and NERC headquarters.

The commission noted the DisCos’ inability to fully comply with all the KPIs in Order No. NERC/320/2022, has led to the failure of the distribution companies to meet their operational obligations, widespread customer dissatisfaction, undermined their ability to uphold market discipline and imperilled the long-term financial sustainability of the utilities

“The imposition of the consequential regulatory interventions specified in this Order shall not be construed as a limitation or foreclosure of the power of the commission to impose any other enforcement sanction under the Electricity Act or any other regulatory instrument.

“This Order is issued without prejudice to the existing obligations and commitment of DisCos as provided in executed contracts and extant rules in the NESI,” said the order signed by the NERC Chairman, Sanusi Garba, and dated July 5, 2024.

For non-compliance to the resolution of complaints through the NERC contact centre or headquarters after the expiration of timelines in the CPR, the DisCo would be made to pay fines within the first month -billing: ₦10,000 per day; disconnection: ₦2,000/day; interruption: ₦2,000/day; metering: ₦1,000/day; delay in connection: ₦1,000/day; Voltage: ₦1,000/day.

After two months of noncompliance to the consumer complaints resolutions, the order stated that “The commission may take other enforcement actions including the withdrawal of the KYL of the head of customer service or the officer responsible for resolving customer complaints in the utility.”

“The NERC order stated that during the effective period of Order No. NERC/320/2022, the commission undertook periodic evaluation of the performance of the DisCos vis-à-vis the set targets and regulatory interventions were taken in line with the provisions of the order and extant rules of the commission.”

On overbilling, NERC said 10 per cent of the naira value of the total overbilling for the period, will be deducted from the DisCo’s annual Admin OpEx allowance during the next tariff review, and credit adjustment for overbilled customers.

“If the energy overbilled is greater than 20 per cent of the allowed cap or the number of customers overbilled represent is greater than 20 per cent of unmetered customer base, the Commission may take other enforcement actions including the withdrawal of the KYL of the Head of Billing or the officer responsible for the billing function in the utility.

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