Electricity: How MAP may make, mar 4.7m unmetered customers
The new Meter Asset Providers (MAP) regulation unveiled by the Nigerian Electricity Regulatory Commission (NERC) may be the magic wand that will end the estimated billing said to be exploitative by electricity users.
As at December 31, 2017, NERC said there were 4.7 million unmetered customers nationwide. This gap, from a registered electricity customer population of about 8 million, proves that about 55 per cent of the customers do not have meters.
With the regulation, they are expected to be massively metered from July 2018 after the 120 days window from NERC for Distribution Companies (DisCos) to engage the certified MAPs.
The law was enacted and signed by the Vice Chairman, Garba Sanusi on March 8, 2018, but is not yet in force till April 8 when NERC said it will become active, same day the regulatory umpire plans to move to its permanent office in the central business district of Abuja.
The new MAP regulation grants 15-year license to the MAP to assist the 11 DisCos fast track meter installations.
One of the key features of the regulation is the introduction of a ‘Metering Service Charge’ which stipulates that customers who are metered under this regulation will have to pay a service charge to recover the cost of the meter in 10 years.
The Commissioner, Legal, Licencing and Compliance at NERC, Dafe Akpeneye who presented the new Meter Asset Provider (MAP) regulation at the 25th power sector meeting in Uyo, Akwa Ibom state said the regulation will bring about over N200 billion investment within three years.
“It will also create jobs as we have introduced local content requirements; it is estimated that 30 per cent of all meters deployed must be procured from local manufacturers and assemblers,” he had explained.
The MAP regulation of the Commission mandates the DisCos to engage the MAP firms granted permit by NERC within 120 days.
“Electricity DisCos shall within 120 days complete the process of engaging Meter Asset Providers based on their respective meter deployment plan and targets set by the Commission,” NERC said in the statement.
After a DisCo gets a MAP, NERC said it will engage a tender auditor to probe the procurement process. The DisCos will also determine the price to fix for the meters to be bought by customers and the service charges to be paid by customers whom it metered.
With the expiration of the April to June window for engaging contractors, Daily Trust projects that the DisCos should start rolling out the meters from July when a new tariff for customer classes may be unveiled.
The process of the MAP regulation began last year with wide consultations in Lagos, Kano, Port Harcourt and Abuja. The fresh regulation submits that to qualify as MAP, firms would have to apply to NERC with a 10-year business plan along with other documents.
“The tenure of MAP Permit shall be 15 years for successful firms in the first instance,” the regulation obtained by this paper read. The Commission said it will grant such permit in 21 days of application based on criteria.
A MAP will also sign a Meter Service Agreement (MSA) with a DisCo to deploy meters within a period through a secured payment plan. With the MSA, the MAP maintains the meter during the period and customers are expected to see officials of MAP doing routine checks on the installed meters rather than officials of the DisCos.
The regulator had said to demonstrate efficiency, the DisCos’ investors, subsidiaries, affiliates, directors and their relatives are not allowed to set up, own shares or hold directorships and senior management positions in the MAP firms.
Daily Trust gathered from industry sources that under the existing condition, some of the over 70 meter installers known by NERC as Meter Service Providers (MSP) are relatives of major shareholders in the DisCos but NERC has by way of this regulation barred such persons from partaking in MAP firms.
It is not immediately clear whether those firms would not be subcontracted by MAP firms as they already have permits or licence to install meters in the Nigerian Electricity Supply Industry (NESI) with some of those licences expiring from 2020.
It is also not clear how NERC will verify the full owners of MAP firms, including those who would own them by proxy, and how it will monitor the management positions filled after a MAP must have been granted permit from NERC.
Some customers and consumer groups who spoke to Daily Trust welcomed the law saying it will now make it possible for customers to buy meters from the DisCos and stop the estimated billing which mandates customers to pay even during periods of power outage.
The Nigerian Electricity Consumers Advocacy Network (NECAN) said it supports the rule but there should not be any increase in tariff due to the regulation.
NECAN Chairman, Chief Tomi Akingbogun told the Daily Trust yesterday that the idea of MAP is that customers should be paying for their meters. Those who cannot pay at once can pay in bits.
He said, “Everybody is tired of the estimated billing method and people are finding ways of getting meters. It means that the provision of meters is very critical to most of us consumers. Now that they have introduced this, we are happy and believe every landlord will be able to install meters in their houses before customers rent it.”
Akingbogun said from the Network’s research, most consumers who are aware of the law are happy that estimated billing will end and they will now be able to buy their meter and pay the right bill. “We have no problem with customers buying their meters. We believe that the tariff will not go up with this regulation. We believe that tariff should come down as we pay for what we use. If there is no tariff increase, then it is a welcome development because customers and manufacturers will not welcome any tariff increase,” Akingbogun noted.
The regulation once implemented after the DisCos engage the MAP contractors from June will enable customers pay at once to get meters installed in their homes within 10 days. While many customers have lauded this development, they insisted that the regulation was silent about whether they will be reimbursed through energy credit for the amount they purchased the meters.
The regulation stated that such customers would not pay the meter service charge but does not say if the customers will get any refund.
Clarifying this in a statement this week, NERC said at present, customers are paying tariff that includes a return on investment on meter assets for the DisCos. This is so even when over 54 per cent of those customers have not been metered.
“The new regulation provides that customers only pay for metering service charge after the installation of a meter at their premises. Electricity Distribution Companies shall create new tariff classes to bring this to effect,” it clarified.
In his reaction, President of Network for Energy Reforms, Kunle Olubiyo said the intention of the MAP regulation is to enhance metering in the Nigerian Electricity Supply Industry (NESI) to ensure revenue for the sustainability of Investment and ultimately ensure customer satisfaction.
He said the lack of liquidity for DisCos has stalled investment in metering which the law will address saying, “The tariff of all customers under the MAP period shall be adjusted to exclude meter cost and so they are expected to pay lower unit rates for their electricity.
“But to guarantee payment for those that have invested in providing metering services, a clear line would be reflected in the bills of those who are metered under the scheme,” Olubiyo explained.
He also noted that the MAP was good for the DisCos, the privatised market and for the customers as it will help close the metering gap. It will increase the liquidity level in the market and will help to enhance energy accountability which means paying for what customers have used.
While insisting that customers should get refund for the meter investments they would make, Olubiyo said, “For the downstream consumers, our stand is that the MAP should recover their meter cost from consumers through DisCos within 10 years and the DisCos can now concentrate on investments component in the networks.
“For the customers, whatever we pay for in clear terms should be translated into energy credit. That is our demand and we are using this medium as our feedback mechanism,” Olubiyo noted.
As the regulation takes place, NERC has said it is expected to close the metering gap within the next three years. Its statement said the regulation was aimed at eliminating the estimated billing and its challenges in the industry.