The Nigerian Electricity Regulatory Commission (NERC) has taken a decisive step to address the longstanding issue of arbitrary billing by Electricity Distribution Companies (DisCos) across the country.
In a statement released on February 8th, NERC announced a hefty fine of N10.5 billion to be levied on all eleven DisCos for their non-compliance with mandated caps on estimated billing for unmetered customers.
According to the statement, DisCos have consistently flouted the prescribed credit caps for unmetered customers, opting instead to impose arbitrary charges on them. This blatant disregard for regulatory directives constitutes a violation of Section 34(1)(d) of the Electricity Act of 2023.
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In response to these infractions, NERC has issued an Order on Non-compliance with the capping of estimated bills, outlining measures to rectify the situation and safeguard consumers’ interests. Among the directives outlined in the order are:
Credit Adjustment to Customers: DisCos are mandated to issue credit adjustments to all customers who have been overbilled for the period of January to September 2023 by the March 2024 billing cycle.
Public Notice: DisCos are required to publish the list of credit adjustment beneficiaries in two national dailies and on their websites no later than the 31st of March 2024.
Regulatory Sanctions: NERC will deduct a sum of N10,505,286,072 from the annual allowed revenues of the eleven DisCos during the next tariff review to penalize future non-compliance with the energy caps approved by the Commission.
This move by NERC comes against the backdrop of longstanding complaints from consumers regarding exorbitant and arbitrary electricity bills, particularly for unmetered customers. The introduction of energy caps aims to address these grievances and promote fairness in billing practices.
However, despite regulatory efforts to enforce the capping system, DisCos have continued to flout these regulations, allowing them to charge energy users arbitrarily. This persistent non-compliance has necessitated NERC’s imposition of significant fines to deter future infractions and uphold the integrity of the regulatory framework.
NERC’s decisive action underscores a significant shift from its previous approach to consumers’ complaints over arbitrary estimated billing. Holding DisCos accountable for their billing practices has long been advocated as the best way to deter exploitative practices and ensure a fairer and more transparent billing system for all electricity consumers.
Tinubu signs Electricity Amendment Bill into law
In related developments, President Bola Tinubu has recently signed the Electricity Act (Amendment) Bill, 2024, into law. The bill, which passed through both chambers of the National Assembly in 2023, seeks to address various issues within the electricity sector, including concerns related to host community development and environmental sustainability.
Sponsored by Hon. Babajimi Benson, the Electricity Act (Amendment) Bill, 2024 sets aside five percent of the actual annual operating expenditures of power generating companies (GENCOs) for the development of their respective host communities. This provision aims to ensure that host communities benefit from the operations of GENCOs by funding infrastructure development projects that enhance their well-being.
Furthermore, the Act mandates the appointment of a reputable Trustee/Manager to oversee the receipt, management, and administration of funds allocated for host community development. This mechanism is designed to ensure transparency and accountability in the utilization of funds, thereby maximizing their impact on community development initiatives.
NERC’s imposition of fines on DisCos for billing infractions and the signing of the Electricity Act (Amendment) Bill, 2024, into law signal significant developments within the Nigerian electricity sector. These measures are expected to improve regulatory oversight, promote consumer rights, and facilitate sustainable development within host communities, ultimately enhancing the credibility of the nation’s electricity supply.