NERC: ELECTRICITY TARIFF INCREASE WOULD REDUCE GRID COLLAPSES, ENHANCE SUPPLY

Equally yesterday, NERC made available the key indices that led to a review of electricity prices for Band ‘A’ customers from N68 to N225 per kilowatt hour.

In its “Supplementary Order to the Multi-Year Tariff Order (MYTO) 2024”, seen by THISDAY, NERC listed a rise in Nigeria’s inflation by 12 per cent between January and April this year, US inflation upsurge by three per cent, and Nigeria's exchange rate increase by 59 per cent within the four months of 2024 as some of the reasons.

NERC also stated that there had been a 63 per cent rise in generation cost, 34 per cent rise in transmission and administration cost, as well as 11 per cent hike in the price of gas-to-power, saying they are other justifications for the move.

But speaking on the poor electricity supply in recent times due to the national grid collapse, Oseni said it had to do with the reduction in gas supply to some power plants and lack of maintenance of facilities by the generation companies.

He stated, “One factor that was responsible for this last one had to do with the reduction in gas to one of the power plants and also you have the issues of a lack of maintenance by the generation companies.

“The question is what contributed to that were both dip in the supply of gas as well as generation companies’ inadequate maintenance, which boils down to money.

“Any investor will not invest when there is no path to recovery. For instance, the generation invoice for January stood at N240 billion. So, based on the current Distribution Companies (Discos) charges before yesterday, they can only be mandated to pay about 10 per cent of that.

“That means the market will only do about 10 per cent of the invoice and how do you operate such a market and you expect quality service? So, those are part of the issues that we need to address.

“The factors responsible for grid collapse, if there is no liquidity, has serious implication on the quality of supply. Generation Companies (Gencos) not being able to pay for gas supply, not being able to maintain their machines as expected or as required is a recipe for poor quality of supply and grid collapse.

“So, it is part of the issues, that we believe if the market is liquid enough, definitely will be addressed.”

Oseni acknowledged potential short-term inflationary effects of the decision, but expressed confidence that tariff adjustments would lead to long-term improvements in service quality and market stability.

He added that NERC remained committed to addressing industry challenges and promoting transparency in the electricity market.

Oseni added that the establishment of a complaints department underscored the commission's dedication to consumer welfare and service excellence.

He said, “The commission has a number of mechanisms in place for monitoring the performance of the distribution companies. First and foremost, the distribution companies were directed some months back to install smart meters on their feeders, and on the basis of that, they get data being streamed into the data system.

“And initially, we developed an application protocol interface to extract the data from the system and stream the data from the system into the commission. However, we realised that there are some challenges with that because sometimes the technology also fails.

“So, we now mandated them to grant access directly to the commission into the meter data management system so that as they get information, we are also getting it directly. And as part of the system being put in place, NERC has a call centre that any customers that feel exploited can naturally call. So the call centre has been put in place to ensure that customer’s complaints are addressed.

“In the next few days, the commission would release contacts of the situation room for people who feel exploited or probably have poor service delivery, starting with the 15 per cent that would be affected by this review.”

In addition, in the supplementary order by NERC, it said, “The Discos shall set up a rapid response team to ensure effective service delivery on the committed minimum hours of supply to each service Band commencing with Band A feeders effective from April 3, 2024.

“The team shall ensure timely response to customers’ complaints, fault clearing and alignment with TCN regional teams for effective load management and optimised dispatch to respective feeders.

“Disco's shall publish the contact numbers of the service rapid response team for each customer cluster/business unit on its website and circulate the same to the customers via bulk SMS, commencing with Band A clusters no later than 12 noon, Friday April 5, 2024.

“Discos are obligated to publish daily on its website a rolling sevenday average daily hours of supply on each Band A feeder no later