ArticlesFeatures

NERC Lowers Fixed Charge, Effects Slight Increase In Electricity Tarrif

NERC was inaugurated on December 22, 2010 and regularly provides facts about its regulation as well as ensure consumer satisfaction.

The regulatory commission looks at the public interest and focuses on three things; transparent electric process, information disclosure and social responsibility.

The Nigerian Electricity Regulatory Commission (NERC) bi-annual review of the Multi Year Tariff Order has brought about
marginal increase in the monthly charges to be paid by certain classes of electricity consumer nationwide.

NERC Chairman, Dr. Sam Amadi, made the disclosure in an interview on Monday in Abuja. According to him, major outcome and highlight of the review will delight consumers, who have complained and agitated severally about Fixed Charge.

See the breakdown below:

Benin Disco – Fixed Charge reduced by 50% from N1,500 to N750;

Kaduna Disco – Fixed Charge reduced by 39% from N1,280.00 to N781.13;

Abuja Disco – Fixed Charge reduced by 29% from N985.92 to N702.11k; Enugu Disco – Fixed Charge reduced by 26% from N874.50 to N650;

Eko – Fixed Charge reduced by 34% from N1,125 to N750;

Jos – Fixed Charge reduced by 34% from N1,162.50 to N775;

Kano – Fixed charge reduced by 25% from 889.50 to 669.90;

Yola – Fixed Charge reduced by 40% from N1250 to N750; Port- Harcourt – Fixed Charge reduced by 33% from 1050 to N700;

Ikeja – Fixed Charge reduced by 17% from N899.50 to N750;

Ibadan – Fixed Charge reduced by 20% from N781.13 to N6824.95.

Dr. Amadi, said the drastic reduction is one of many positive actions that NERC has taken in recent times in its effort to be much more responsive to the needs of Nigerian consumers while ensuring that the industry is strengthened for better service delivery.

nerc

The positive actions include: “The recent abolishment of Meter Maintenance Fee for all consumer classes; the total removal and elimination of Fixed Monthly Charge for the consumer class with the highest population of Nigerians – the R1 consumer class (The R1 class are the lowest-income consumers, aka, the “masses”); the recent NERC Order which stipulates that any consumer that has not received continuous or cumulative electricity supply for a period of 15 days in a month will not pay the Fixed Monthly Charge. This Order took effect on May 1, 2014.”

Continuing, the chairman stated that the commitment and job of NERC as a  Regulator is to ensure that Nigerian electricity consumers have access to adequate and reliable electricity at a reasonable price.

To achieve this, Dr. Amadi said the commission has to delicately balance the dynamics between consumers who naturally tend towards wanting to pay less for more electricity, and the privatized Electricity Industry which needs to be financially viable in order to provide the consumer with more affordable electricity.”

On what comprises the tariff paid by a consumer is made up of the Fixed Charge and the Energy Charge, he explained that  the Fixed Charge recovers the capital cost and fixed operations cost like maintenance of poles, cables, transformers, etc while the Energy Charge is a function of consumption paid by consumers only when electricity is consumed and also covers the costs of the electricity and operations.

“Nigerians complained about Fixed Charge. NERC listened and delivered a comprehensive 3-prong response. We eliminated Fixed Charge for R1 consumers, we drastically cut Fixed Charge for other consumers, and we ensured that any consumer who does not receive electricity supply for half a month will not pay Fixed Charge for that month. Our thinking is that this comprehensive response will help provide DISCOs with the incentives to improve supply to consumers.

“This is because with the drastic reduction of Fixed Charges, they will be moved to improve supply so as to be able to recoup their investments through Energy Charge – which depends on the consumer having electricity to consume.”

To ensure balance in the industry, Dr. Amadi announced a slight increase in energy charge only for R2 consumers and only in certain DISCOs.

He enlightened that the development will create an additional layer of incentive to the DISCOs to provide even more electricity to consumers.

Reiterating the goal of the commission, he said “Our goal is clear and simple: To increase supply of electricity.”

“Consumers need not worry about the slight increase in Energy Charge because it is so slight that the removal and reduction of Fixed Charge compensates for it. In fact, many of those affected will not even be paying more for electricity at the end of the day.

“It is not for everyone. It is only for the R2 class of consumers. That means that it does not in any way affect the Nigerian masses in the R1 class
It is not even for all R2 consumers. It is only for R2 consumers in certain areas. For Ikeja Disco, Energy Charge and Fixed Charge is reduced.

Dr. Amadi assured all Nigerian consumers that the process that led minor review was not only well thought through and tested, it was also passed through the MYTO Framework which guarantees that not only is the consumer well protected, but that the industry is viable enough to in turn deliver more and affordable electricity to the consumer.

“Our commitment as Regulator is to not only ensure that Nigerian electricity consumers have access to adequate and reliable electricity but also to provide processes and mechanisms for effective remedies for any violations of service obligations by the service providers in the new Nigerian electricity market,” he concluded.

“It has taken Nigeria 64 years to deliver 4000 megawatts a day, in the same period of time, Singapore, Malaysia, Korea before whom we all started this business have not only caught-up with us, they caught-up with us like 40-years ago. They also outstripped us and left us standing.

He added that “Turning that around to a position where your electricity sector is not a hindrance to our economy, but an enabler, is not going to happen overnight”.

Leave a Comment