DISCOs must consult consumers before tariff increase, NERC insists

Electricity distribution companies (DISCOs) must consult consumers before approaching the Nigerian Electricity Regulatory Commission (NERC) for ratification of any plan to increase tariff, the regulatory agency has said.

Chairman of NERC, Dr. Sam Amadi, said this when he hosted a three-man delegation that came to Nigeria, according to a statement made available to newsmen in Abuja yesterday by Head, Public Affairs at NERC, Dr. Usman Arabi.

Amadi said NERC would ensure that electricity customers pay only an efficient tariff. This, he said, accounted for the removal of technical losses as a component of tariff chargeable by electricity distribution companies.

He said the commission questioned the framework that led to huge collection losses passed to electricity consumers and kicked against it because it was against international best practices and encouraged lack of performance on the part of the distribution companies.

The NERC boss said electricity distribution companies must consult with the consumers before it can approach the commission for tariff review. He, however, didn’t specify the modalities or steps a DISCO would take in consulting with consumers within their area of jurisdiction.

“We want a transparent, participatory and cost reflective tariff. We have outsourced the tariff making process to the distribution companies and provided them strict guidelines. The regulatory question is about what should be passed to the consumers.

“One school of thought is legalism and another is about what is right.  So essentially, we ruled out collection losses and put it at zero.

“The process of improving power supply lies with embedded generation. For now, Ikeja Electricity Distribution Company is making progress and other distribution companies would soon follow suit.”

Amadi explained that the industry was between 80 and 85 percent gas-dependent, adding that pipeline vandalism has remained a big challenge.

According to him, the problem of gas shortage is affecting revenue flow and if it could be resolved, the issue of cost reflective tariff would be easily resolved.

He said capacity constraint had remained a major challenge at the transmission level but added that the completion of some of the 118 projects listed last year by the Transmission Company of Nigeria would assist in removing the bottlenecks.