NERC goes tough on DisCos for improved electricity, announces sanctions for overbilling

Key Points

• NERC Sanctions: The Nigerian Electricity Regulatory Commission (NERC) has introduced stringent sanctions against electricity distribution companies (DisCos) that fail to meet performance standards, aiming to protect consumers.
• Energy Off-Take Requirement: DisCos must off-take at least 95 per cent of their allocated energy. Failure to do so will result in a 5 per cent reduction in administrative and operational expenditure.
• Performance Indicators: DisCos will be evaluated on seven key performance indicators, including energy off-take, revenue recovery, compliance with accounting systems, feeder streaming, estimated billing caps, forum decisions, and service standards.
• Penalties for Overbilling: If customers are overbilled, DisCos face a deduction of 10 per cent of the total overbilled amount from their annual administrative expenditure and must provide credit adjustments to affected customers.
• Customer Service Compliance: Non-compliance in resolving complaints through the NERC contact centre will incur daily fines and potential enforcement actions, including the removal of responsible officers.
• Continuous Evaluation: NERC will continue to evaluate DisCos’ performance and impose regulatory interventions as needed to ensure compliance with operational obligations and market discipline.
• Legal and Contractual Obligations: The new sanctions do not override existing legal and contractual obligations of the DisCos, as outlined in the Electricity Act and other regulatory instruments.

In a decisive move to enhance the reliability of electricity distribution and protect consumers, the Nigerian Electricity Regulatory Commission (NERC) has announced stringent sanctions against electricity distribution companies (DisCos) that violate performance standards.

This initiative is aimed at addressing the recurrent issues faced by consumers and ensuring a more stable electricity supply.

According to the new regulations, any DisCo that fails to off-take at least 95 per cent of its allocated energy will face a reduction of 5 per cent in its administrative and operational expenditure. This measure is part of a broader performance monitoring framework outlined in NERC’s latest order.

Performance Indicators and Compliance

DisCos will now be assessed on seven critical performance indicators, including:

1. Energy Off-Take: Ensuring at least 95 per cent of allocated energy is off-taken.
2. Revenue Recovery Rate: Efficient collection of revenue.
3. Uniform Accounting System Compliance: Adherence to standardised accounting practices.
4. API Feeder Streaming Compliance: Proper reporting and data management.
5. Estimated Billing Cap Compliance: Adhering to regulations on capping estimated bills.
6. Forum Decisions Compliance: Implementing decisions from regulatory forums.
7. Service Standards Compliance: Timely resolution of complaints received through NERC’s contact centre and headquarters.

Sanctions for Non-Compliance

DisCos that fail to meet these standards will face significant penalties. Specifically, failure to off-take 95 per cent of available energy in two out of three months in a quarter will trigger a 5 per cent cut in their guaranteed administrative expenditure for the subsequent quarter.

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Additionally, overbilling customers will result in a deduction of 10 per cent of the overbilled amount from the DisCo’s annual administrative budget, along with necessary credit adjustments for affected customers.

For instances of extensive overbilling, where the overbilled energy exceeds 20 per cent of the allowed cap or affects over 20 per cent of unmetered customers, NERC may enforce stricter actions, including the dismissal of the head of billing or the officer responsible for billing.

Addressing Customer Complaints

DisCos that fail to resolve complaints through the NERC contact centre or headquarters within specified timelines will face daily fines:

• Billing issues: N10,000 per day
• Disconnection issues: N2,000 per day
• Service interruptions: N2,000 per day
• Metering delays: N1,000 per day
• Connection delays: N1,000 per day
• Voltage issues: N1,000 per day

Prolonged non-compliance, exceeding two months, may lead to further enforcement actions, including the removal of the head of customer service or the officer in charge of resolving complaints.

Ongoing Evaluation and Legal Considerations

NERC will continuously evaluate DisCos’ performance against the established benchmarks and enforce regulatory interventions to uphold market discipline and operational standards.

Also Read: Nigerians Will Start Witnessing Improved Electricity Supply As From July 1- NERC

The commission emphasised that these sanctions are in addition to existing obligations under the Electricity Act and other regulatory frameworks.

“The imposition of these sanctions does not limit NERC’s authority to enforce additional penalties as per the Electricity Act or other regulatory instruments,” stated NERC Chairman Sanusi Garba in the order dated July 5, 2024.

This robust regulatory approach underscores NERC’s commitment to ensuring efficient electricity distribution, enhancing customer satisfaction, and promoting the financial sustainability of the sector.