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NERC abolishes N750 fixed electricity charge

By The Rainbow
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The Nigeria Electric­ity Regulatory Com­mission (NERC) has suspended further collection of fixed charges on unconsumed electricity if power was not supplied continuously or cumulatively for 15 days in a month.

Chairman of  the commission, Dr. Sam Amadi,  told newsmen in Abuja on Wednesday that the NERC  had signed into law a new operational order regulating the administration of fixed charge in the country.

He said,  'Any customer who experiences continuously or cumulatively power outage for 15 days in a month will be exempted from paying the monthly fixed charge to the Electricity Dis­tribution Company (Discos).'

The directive is effective from May 1, 2014. He further ex­plained that in as much as the 15 days power outage was not due to the customer's dis­ruption or default in paying bill, the Discos shall forego monthly fixed charge.

With the order, consumers of electricity would have the chance to hold back payment of fixed electricity charges to distribution companies contained in their bills.

He said the new order was intended to get operators of the various distribution companies become responsive to their responsibilities following complaints of poor service delivery.

Amadi  explained that the implementation of the new order is expected to begin immediately once it is served to the distribution companies.

He noted , however, that certain conditions must be established for affected consumers to withhold such fund.

The conditions include  valid evidence that interruptions in power supply to affected consumers were not occasioned by larger industry disturbances such as drop in national power generation capacity, vandalism of strategic national power supply assets like transmission lines and such extant general challenges that are peculiar with the power sector.

According to the NERC boss,  instances of willing cut in power supply as a result of transformer and distribution assets breakdown and a subsequent refusal of distribution networks to fix same, will be counted as conditions upon which consumers can base their claims if it contributed in power supply interruptions for up to 15 days.

Amadi assured that the commission will continue to 'defend the fixed charge component of the electricity bill because we believe that it is in line with the right of the people to have sustainable supply of electricity which is what the fixed charge is meant to improve.

'Because we are the regulator, we have to protect consumers and investors. The fixed charge is an element of an electricity customers' electricity bill that is charged on a monthly basis. It is intended to allow for the recovery of costs associated with the fixed or permanent investments required to generate, transmit and distribute electricity.'

The decision, according to him, was based on the com­mission's 2005 Act, Section 32 D and F, while he stated that the NERC has decided that the fixed charge remains an essential component of the bill. It has, however, reviewed its continued reflection in the tariff in the payment of the fixed charge in the light of sev­eral complaints by consumers, particularly the payment of the fixed charge when energy is not delivered to them.

'Upon due consideration of these complaints and agitations by customers, and considering the commissions role in the Nigerian Electric­ity Supply Industry (NESI) as provided under Sections 32(d)&(f) of the EPSR Act 2005:

'Effective May 1, 2014, where any customer of a distribution licensee has not received continuous or cumu­lative electricity supply for a period of 15 days in a month, such a customer shall not be required to pay the fixed charge,' he stated.

In a fact sheet, which the commission made available to newsmen, it described fixed charge as an element of an electricity customer's elec­tricity bill that is charged on a monthly basis.

The fixed charge is intend­ed to allow for the recovery of the cost associated with the fixed or permanent invest­ments required to generate, transmit and distribute elec­tricity.

But the commission's chairman said that the order was to compel the distribution companies to always reinstall faulty equipment such as transformers immediately.

Amadi, however, added that the essence of the order was to create a balance that protects the consumers and affords the distribution com­panies some incentives to be responsive without threaten­ing the reliance of the industry.

His words: 'It is hereby ordered that effective May 1, 2014, where any customers of the distribution licensees has not received continuous electricity supply for a period of 15 days in a month, such a customer shall not be re­quired to pay the fixed charge provided that the disruption is not due to non-payment of electricity bill or other actions of the consumer like temper­ing, vandalism or it is totally unrelated to the fault of the distribution company.

'In other words, fixed charge should be paid and the only condition for non-payment is when you do not receive continuously 15 days power supply.

The fact is that we want to ensure that the Discos receive enough revenue to maintain the network. At the same time, we don't want it to be an incentive for them not to re­spond to the faults they could manage within their existing commitment.

'So the commission has tailored a deliberate balance that protects consumers and provides incentives for Discos to be efficient and responsive but without threatening the reliability of the industry as a whole in ensuring that there will still be fund to give stable electricity to the consumers.'

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