The Nigerian Electricity Regulatory Commission (NERC) has issued a stern warning to distribution companies (DisCos) regarding poor power distribution. In its directive on monitoring performance, NERC emphasized that failure to secure at least 95 percent of the allocated monthly energy for distribution will result in penalties.
The regulatory authority has introduced stringent measures to penalize utility companies that violate rules, potentially harming electricity consumers. NERC announced it would cut five percent of the administrative and operational spending of any DisCo that fails to secure at least 95 percent of the allocated energy for distribution each month.
The directive stated that failing to secure the required energy would lead to corrective actions, such as reducing DisCos’ guaranteed administrative and operational spending by five percent for the upcoming quarter. DisCos will now be evaluated based on seven critical performance metrics:
- Percentage of energy consumed compared to contracted capacity
- Rate of revenue recovery
- Adherence to a standardized system of accounts
- Compliance with rules on feeder streaming
- Adherence to the directive on limiting estimated bills
- Compliance with rules on implementing forum decisions
- Adherence to service standards for addressing complaints received through the NERC contact centre and NERC headquarters
NERC highlighted the severe consequences of DisCos’ failure to meet the performance criteria, noting widespread customer dissatisfaction and compromised long-term financial viability of the utilities. Immediate action is deemed necessary to rectify the situation.
“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,” the order stated. Signed by NERC Chairman Sanusi Garba and dated July 5, 2024, the order emphasized existing obligations and commitments of DisCos as provided in executed contracts and extant rules in the Nigerian Electricity Supply Industry (NESI).
DisCos will face penalties for failing to address complaints per the NERC resolution within specified timelines in the Consumer Protection Regulation (CPR). Fines will be imposed within the initial month, with charges set at ₦10,000 per day for billing issues, ₦2,000 per day for disconnections, interruptions, and voltage problems, and ₦1,000 per day for metering and delays in connection.
After two months of non-compliance with consumer complaints resolutions, the commission may take further enforcement actions, including the withdrawal of the Key Performance Indicator (KPI) of the head of customer service or the officer responsible for resolving customer complaints.
The NERC order stated that during the effective period of Order No. NERC/320/2022, the commission undertook periodic evaluations of DisCos’ performance against set targets and implemented regulatory interventions in line with the provisions of the order and extant rules.
Regarding overbilling, NERC said 10 percent of the naira value of the total overbilling for the period would be deducted from the DisCo’s annual administrative and operational expenditure (Admin OpEx) allowance during the next tariff review, alongside credit adjustments for overbilled customers. If the energy overbilled exceeds 20 percent of the allowed cap or the number of overbilled customers exceeds 20 percent of the unmetered customer base, NERC may take further enforcement actions, including the withdrawal of the KPI of the Head of Billing or the officer responsible for the billing function in the utility.
