NERC rolls out tough sanctions for Discos

The Nigerian Electricity Regulatory Commission has rolled out touch sanctions against Discos that commit infractions capable of inflicting pain on consumers.

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

This was contained in the commission’s Order on Performance Monitoring Framework for all the DisCos.

According to the order, 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.

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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.

But the failure of any DisCo to off-take up to 95 per cent of available nominations in two of the three months in any quarter will attract a downward adjustment of DisCos guaranteed Admin OpEx by 5 per cent for the next quarter.

Also, for any instance of a customer overbilled, 10 per cent of the naira value of the total over-billing 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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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:  N10,000 per day; disconnection: N2,000/day; interruption: N2,000/day; metering: N1,000/day; delay in connection: N1,000/day; Voltage: N1,000/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.”

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The commission noted that the DisCo’s inability to fully comply with all the KPIs contained 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.

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