DisCos to Refund Electricity Customers Who Pay Upfront for Meters
By Ikenna Omeje
The Nigerian Electricity Regulatory Commission (NERC) has said that electricity customers who choose to make upfront payments for meters under the National Mass Metering Program (NMMP) and the Meter Asset Provider (MAP) will be refunded by electricity Distribution Companies (DisCos) through energy credits.
This is contained in the Meter Asset Provider (MAP) and National Mass Metering Program (NMMP) – Regulation No: NERC -R- 113 – 2021 signed by the Chairman of NERC, Sanusi Garba, which took effect on August 9, 2021.
“Where a customer elects to make upfront payments for meters under these regulations, the cost of the meter shall be refunded through energy credits by the Distribution Licensees. The reimbursement schedule shall be as approved by the Commission, having regard to an evaluation of the financial standing of the Distribution Licensee. This provision also applies to upfront payments already made by customers upon the commencement of the MAP framework in 2018.” NERC stated.
As a regulatory initiative towards closing the metering gap of about 10 million meters in Nigerian Electricity Supply Industry (NESI) over a period of three years, the NERC approved MAP in 2018. The MAP framework sought to provide for the provision of end-use meters as a service by third party investors based on which customers benefitting from such meters pay Metering Service Charge (MSC). This concept was in recognition that electricity meters are fixed assets with a long useful life and may therefore be financed by interested investors, with capital recovery over the life of the asset. Under the programme, DisCos were excluded from the direct purchase of the meters as a way to attract private sector investment in metering.
However, MAP recorded limited success mainly because of absence of risk mitigation mechanisms for payment default and the inability of MAP permit holders to secure local medium/long term financing with a tenor longer than five years.
Following the failure of MAP to address the issue of metering gap in the country, the Federal Government approved NMMP – a policy intervention (with the support of the Central Bank of Nigeria) for the provision of long term (10-year tenor) single digit interest loans to DisCos strictly for the provision of electricity meters.
Under the programme, only local meter manufacturers/assemblers are qualified to participate, pursuant to the provisions of Executive Order No. 5, to promote job creation. Also, end-use meters are to be installed on customer premises on DisCos’ own account and without payment for the meters by the customers in any form except through end-user tariffs.
In Section 24 (1) d and e of the Regulations, NERC noted that in accordance with the Metering Code, repair or replacement of faulty meters by DisCos will happen within two days at no extra cost to the customer, adding that where dispute arises the customer is entitled to fair resolution.
“The repair or replacement of faulty meters by Distribution Licensees (DisCos) within 2 days in accordance with the Metering Code at no additional cost to the customer. Where it is established that the customer willfully damaged a meter, Distribution Licensee shall replace the meter based on an upfront payment by the customer or other mutually agreed terms of payment,” NERC said.
“Where dispute arises on responsibility for destruction of a meter, the customer shall be entitled to a fair resolution of the dispute in compliance with the Metering Code and other regulatory instruments of the Commission; and the Distribution Licensee shall replace the meter pending the resolution of the dispute.”
In its Q1 2020 report, NERC said that of the over 10 million registered customers only 4 million were metered. Compared to the Q4’ 2019, the Regulator said the number of registered and metered customers increased by 1.0 percent and 8.0 per cent respectively.
Similarly, in the Q2 2020 report, the NERC said, “Although there was a slight improvement during the quarter, the huge metering gap for end-use customers remains a key challenge in the industry. The records of the Commission indicate that, of the 10,516,090 registered electricity customers as at 30 June 2020, only 4,234,759 (40.27%) have been metered. Thus, 59.73 percent of the registered electricity customers are still on estimated billing which has contributed to customer apathy towards payment for electricity bills. In comparison with the first quarter of 2020, the numbers of registered and metered customers increased slightly by 0.36 percent and 0.07 percent respectively. The increase in registered customers was, in addition to new connection, due largely to the on-going customer enumeration exercise by DisCos through which unregistered consumers of electricity were brought unto the DisCos’ billing platform. Similarly, the increase in metered customers was attributed to the roll-out of meters under the MAP scheme.”
However, according to the NERC MAP and NMMP Regulations, “A total of 583,733 meters were installed by MAPs from 1 August 2019 to 30 June 2021, out of which 571, 835 meters were installed from upfront payments and 11, 898 meters were installed on the basis of MSC payments.”
In a statement on August 19, 2021, via his verified Facebook page, the Minister of Power, Engr. Sale Mamman, noted: “Till date, 750,000 meters have been delivered to DisCos in just under 8 months. This is a marked improvement in terms of the speed of installation of meters compared to its predecessor (Meter Asset Provider – MAP program) which recorded 350,000 meter installations in just over 18 months. Essentially the Nigerian Meter Industry has increased local installation capacity by a multiple of 5.”
DisCos speak on NMMP
Speaking with Majorwaves on the number of customers that have been metered on its network through NMMP, the Head, Corporate Communications Unit, Ikeja Electric, Mr. Felix Ofulue, said, “For the first phase which is Phase zero, we received 106,701 meters and at the moment, we have finished installing them.”
Also speaking, the Lead Media Relations Officer, Ibadan Electricity Distribution Company (IBEDC), Busolami Tunwase, told Majorwaves that through the Phase 0 of NMMP, the company has metered 80,122 customers so far.
Responding to a question on whether IBEDC is running NMMP with MAP, she said, ”No. I think for now, NMMP is what is on. But MAP is not completely ruled out. Tomorrow we can have it back, we don’t know yet. But at it is for now, it is NMMP. All meters that are going out now are under NMMP.”
In its Q1 2020 report, NERC informed that the sustainability of the financial viability of the NESI is facing challenges, partly due to the non-implementation of cost reflective tariffs.
It said: “The financial viability of NESI has remained a major challenge threatening its sustainability. As highlighted in the preceding quarterly reports, the liquidity challenge is partly due to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft and consumers’ apathy to payments under the widely prevailing practice of estimated billing.”
Commenting on the commercial performance of the industry, the report explained: “During the quarter under review, the total billing to and collection from electricity consumers by all the 11 DisCos stood at N186.82billion and N114.29billion respectively. …these denote 78.38 percent and 61.18 percent billing and collection efficiency respectively, indicating 4.21 percent and 8.26 percent points decreases respectively, when compared with the fourth quarter of 2019. The level of collection efficiency during the quarter under review indicates that as much as N3.88 out of every N10 worth of energy sold during the first quarter of 2020 remained uncollected from consumers”
According to the Regulator, the 11 DisCos paid only a sum of N60.20 billion out of a total invoice of N185.08 billion issued to them for energy received from the Nigerian Bulk Electricity Trading PLC (NBET) and service charge by the Market Operator (MO) in the first quarter of 2020.
This represents 32.53 percent remittance performance and a 5.79 percentage point decline from the final settlement rate recorded in the fourth quarter of 2019.
“During the first quarter of 2020, a total invoice of N185.08billion was issued to the eleven (11) DisCos for energy received from the Nigerian Bulk Electricity Trading PLC (NBET) and for service charge by MO, but only a sum of N60.20billion of the total invoice was settled, representing 32.53 percent remittance performance. This represents a 5.79 percentage point decline from the final settlement rate recorded in the fourth quarter of 2019, “ the report stated.
It noted: “Whereas three (3) DisCos fully met the expected minimum remittance thresholds (MRTs) to MO, none of the eleven (11) DisCos fully met the MRTs to NBET. The average aggregate remittance performances to MO and NBET were 93.09 percent and 27.96 percent respectively, with performance level ranging from 68.44 percent (Yola) to 100 percent (Eko) for MO and 3.58 percent (Kaduna) to 35.05 percent (Ikeja) for NBET. Only Jos, Enugu and Eko DisCos met the remittance obligation for MO during the quarter under review.”
Also, the Q2 2020 report showed that total billing to and collection from electricity consumers by all the 11 DisCos stood at N164.07billion and N121.61billion respectively. According to NERC, these denote 68.37 percent and 74.12 percent billing and collection efficiency respectively, indicating 10.01 percent points decrease and 12.95 percent points increase respectively when compared with the Q1 of 2020. The report further showed that as much as N2.59 out of every N10 worth of energy sold during the quarter remained uncollected from consumers.
“During the second quarter of 2020, a total invoice of N222.51billion was issued to the eleven (11) DisCos for energy received from the Nigerian Bulk Electricity Trading Plc (NBET) and for service charge by MO, out of which a sum of N62.41billion was settled, representing a remittance performance of 28.05 percent. This represents a 4.67 percentage points decline from the final settlement rate recorded in the first quarter of 2020,” NERC said.
FG to commence second phase of NMMP
The Federal Government has said it has concluded arrangements for the commencement of the second phase of NMMP. The first phase (Phase 0) was launched in December 2020, later than expected, due to the Covid-19 pandemic, with a target of 1million meters across the country.
According to Mamman, a central procurement mechanism to be overseen and supervised by NERC will be employed in order to ensure that meters are secured at the lowest possible cost for phase 1, thereby reaching the goals and objectives of the NMMP. He stressed that the commencement of the procurement process of the Phase has been done strategically to ensure that there is no gap in meter supply to customers as the NMMP transitions from Phase 0 to Phase 1.
The Minister said, “In preparation for the Second Phase (known as Phase 1) of the NMMP, the Nigerian electricity sector regulator, NERC, has conducted extensive consultations and stakeholder management, and has revised its metering guidelines. This phase will provide up to 4 million meters and shall also use a similar financing mechanism as phase 0.
“One of the key successes of the NMMP initiative is how rapidly it has increased private sector interest in investing in the local meter assembly, manufacturing and installation space. In addition to the springing up of new factories such as the Quantum meter assembly plant in Lagos and the Smart Meter assembly plant in Kaduna, We are also seeing the refurbishment and upgrade of some metering plants that had also fallen into disrepair such as EMCON in Kaduna.
“This development in the meter assembly space is driven by the Central Bank’s commitment to support local meter assembly/manufacturing as only local companies will be allowed to participate in the bidding process for the upcoming phase of the program. This promises to increase the job creation impact of the program which has already attained appreciable heights with over 10,000 direct jobs created as a result of the phase 0 of the program.”
The Federal Government expects NMMP to drastically reduce estimated billing by DisCos, and ensure consumers are billed appropriately for the electricity they consume by installing meters free of charge in household and business premises that are currently unmetered. This is in line with the administration’s commitment to eliminate the metering gap by 2023 and its agreements with Organised Labour (NLC and TUC) on Electricity sector reform.
Customers lament over high rates of tariff
A biannual minor review in the Tariff Order signed by the Chairman of NERC, on December 30, 2020, which took effect on January 1, 2021, adjusted the rates for service bands A, B, C, D, E by N2,00 to N4.00 per kWhr.
“In compliance with the provisions of the Electric Power Sector Reform Act (EPRSA) and the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted by NGN2.00 to NGN4.00 per kWhr to reflect the partial impact of inflation and movement in foreign exchange rates,” NERC said in a notice in January.
According to the Notice, “…the tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remains frozen and subsidised in line with the policy direction of the Federal Government.”
However, the adjustment is affecting electricity customers. A landlord in Ota, Ogun State who gave his name as Olabode said that he spends about N15,000 under two to three weeks on energy credits. According to him, apart from his refrigerator, fans, Tv and light bulbs, there are no other things that consume electricity he uses, and wonders how come his energy credits do not last.
Also, a barber in Ota, Ogun State, Shola Adebanjo, said that his electricity bill has increased by 100 percent following the installation of smart meter in the building housing his shop.
“Since the installation of meter in the building housing my shop, my landlord has increased the money I used to pay monthly from N1,000 to N2,000. Most times, he switches off electricity in the house. I don’t On my Tv. I know that I don’t consume much electricity, but I still pay N2,000 every month,” Adebanjo lamented.
Another electricity customer who gave her name as Chinonso and resides in Ikotun, Lagos State, told Majorwaves that she pays between N4,500 and N5,000 every month for energy credits. Chinonso who shares a meter with two other tenants in her compound said that they spend between N12,500 and N15,000 on energy credits.
According to Chinonso who obviously was not happy about the amount she spends monthly, apart from their fans, Tv sets, cable decoders, refrigerators, lights bulbs, they do not have other electrical appliances that consume energy, adding that the three of them hardly stay at home because of their work and businesses.
With the imminent commencement of the Phase 1 of NMMP by the Federal Government, which targets to meter about 4 million customers, it is expected that the success of the Phase will reduce the number of unmetered customers to about 2 million. However, because of the inability of the government to meet the target of Phase 0, which was to meter 1 million electricity customers, it remains doubtful that the Phase 1 target of 4 million will be achieved.