Nigeria: Electricity Tariff Increased, Fixed Charges Removed

PRESS RELEASE

New Tariff Regime Removes Fixed Charges

The new electricity tariff regime approved over the weekend by the Nigerian Electricity Regulatory Commission (NERC) has removed fixed charges for all classes of electricity consumers. Henceforth, from the next billing period, distribution companies will no longer charge their customers monthly fixed charges. Fixed charge is that component of the tariff that commits electricity consumers to paying an approved amount of money not minding whether electricity is consumed during the billing period.

*Amadi 

Under the new tariff regime, electricity consumers will now only pay for what they consume from month to month. According to the Chairman/CEO of NERC, Dr. Sam Amadi, "This is good news for electricity consumers who have long asked for a more just and fair pricing of electricity. The regulatory commission had promised to address all the complaints against fixed charges through a regulatory process that promotes investments in the electricity industry without unfairly burdening electricity consumers. This is in line with NERC's mandate to be fair in all its regulatory interventions".

Although, the new tariff regime comes with an increase in energy charges, all electricity consumers (residential as well as commercial) will no longer pay fixed charges. Their total bills will depend on the electricity they actually consume and may be reduced when they conserve electricity. Consumers will no longer be spending money every month to pay for fixed charges even when they do not receive electricity in their homes and business.

According to the chairman of NERC, "The objective of the new tariff is to enable prudent consumers to save money on electricity bill as they can now control their consumption and not pay monthly fixed charges".

For instance, residential customer classification (R2) in Abuja Electricity Distribution Company will no longer pay N702.00 fixed charge every month. Their energy charge will increase by N9.60kwh. Also, residential customers (R2 customers) in Eko and Ikeja electricity distribution areas will no longer pay N750. 00 fixed charges. They will be getting N10kwh and N8kwh increase respectively in their energy charges. Similarly, the burden of N800.00 and N750.00 fixed charges would be lifted off the shoulders of Kaduna and Benin electricity consumers. These consumers will see an increase of N11.05kwh and N9.26kwh respectively in their energy charges.

The new tariff is also good news for commercial consumers. For example, commercial customers' classification C2 in Ibadan and Enugu will no longer pay fixed charges of N17, 010. 00 and N22, 141. 00. Their energy charge will increase by N12.08kwh and N13.35kwh respectively.

In line with the transparent disposition to its operations full details of the new tariff regime would be advertised in major national dailies and Commission website within the next 24 hours.
Besides, this cost saving element, the new tariff regime comes with renewed commitments by the electricity distribution companies (discos) to rapidly improve on the downtime and quality of electricity supply. These commitments are contained in service level agreements, which are based on the performance level agreements submitted by the new owners during the bid process. The tariff order also encourages the distribution companies to develop new sources of supply within their franchises to increase the amount and quality of supply to target customers on a willing buyer willing seller basis. These measures are necessary to improve electricity supply across Nigeria and ensure that the distribution companies are working hard to increase investment that will ensure predictable and ultimately reliable and uninterrupted electricity supply in Nigeria.

Henceforth every disco should meter all its customers. The metering policy will be strictly enforced. For those willing electricity customers who paid for meters under the Cash Advance Payment Metering Initiative (CAPMI) but are yet to be metered within the allowable 60 days would no longer be billed by the electricity distribution companies under the new tariff regime. And the discos will not disconnect them. There is zero tolerance for overbilling of customers. An unmetered customer who is disputing his estimated bill would not be expected to pay the disputed bill. He would pay his last undisputed bill as the contested bill go through the dispute resolution process. This is a departure from the old practice which prescribes that customers should first settle the bill while dispute resolution is in process.

Meanwhile, no electricity distribution company is allowed to connect new customers without metering the customer first. This is to close the wide metering gap of over 50 per cent and reduce high incidence of collection losses in the Nigeria Electricity Supply Industry (NESI).
According to the Commission, "the new tariff regime is the result of a transparent, rigorous and credible rate review process. The tariffs will lead to greater reliability in the provision of electricity. More people will progressively have access to the grid, more meters will be deployed and the need for self generation would be gradually reduced."

The Commission expects the electricity distribution companies to provide better customer service in all aspects of their operations and would hold the electricity distribution companies responsible for their service level agreements.

 Dr. Usman Abba Arabi 
Head, Public Affairs Department,

NERC