Another era of increase in electricity tariff for consumers

June 7, 2014

A tilted electricity pole in Jakande Estate, Lekki, Lagos

To the millions of electricity consumers in Nigeria, there are always challenges. The Nigerian Electricity Regulatory Commission recently announced that electricity consumers had been subjected to an increase in tariff which came to effect on June 1.

The commission, which recently approved a new electricity tariff following the review of the Multi Year Tariff Order, however, expressed regret that the customer tariff would have to increase – in what is perhaps an acknowledgement of the non-justification of the increase in the tariff.

According to NERC, one of the indices for the review is “available generation capacity,” arising from the fact that the gross available capacity from the grid as of March 31, 2014 review date is 4,306MW. This is well below the 9,061MW that NERC had, on the basis of all information available to it, projected when MYTO2 was set in June 2012.

In a report, the figure shows a 52 per cent reduction in projected capacity.

However, consumers would not have raised concerns over the proposed increase if power supply to them had significantly improved and they are being properly metered such that they pay for only what they consume.

On Monday, June 2, 2014, it emerged that electricity supply in some locations across the country would drop following the shutdown for the repair of Utorogu and Ughelli East gas plants. The repair is scheduled to take place from June 2 to June 22, 2014.

Over the years, electricity consumers in the country have continued to suffer from blackouts even when they had to pay through their nose for power they did not really enjoy, no thanks to estimated billing, which still remains the order of the day in the electricity market. There have been growing complaints from consumers about over-estimated or ‘crazy’ billing in recent times.

The metering gap in the Nigerian electricity market is very huge, with about 50 per cent of consumers not having meters, according to a committee on metering set up by the NERC. As there is high demand for prepaid meters by consumers, the new investors in the electricity distribution companies have done very little to make them available to the many consumers who are willing and ready to buy.

Based on the proposals submitted by the core investors in the Discos, 6.52 million new meters would be installed over the course of the next five years, meaning more than one million would be installed yearly.

Following the conclusion of the privatisation of the defunct Power Holding Company of Nigeria late last year, the new investors who took over the Discos jettisoned the scheme. But now, a number of them including Eko, Kaduna and Abuja Discos are implementing the scheme.

It is therefore expected that NERC would step up its game and keep the Discos on their toes in making the necessary investment to ensure a robust metering of customers and curb the reckless estimated billing.

Meanwhile, the Chairman of NERC, Dr. Sam Amadi, has said that the increase, which would mostly affect customers within the tariff classes of Residential-2 and Commercial-1, would not affect the total amount payable by consumers as fixed charge components that are usually embedded in their monthly electricity bills.

According to him, having listened to complaints by consumers who agitated severally about Fixed Charge, they will begin to pay a lower charge with effect from June 1.