NERC’s Accountable Power Strategy Debuts amid Apprehension

Electricity distribution companies have commenced implementation of the new Meter Assets Providers (MAP) regulation, which aims to achieve full metering of electricity consumption in the country within three years, but challenges remain. Chineme Okafor reports

The main objectives of the Meter Assets Providers (MAP) regulation may be few, but they are key to the survival of the power market in Nigeria. The Nigerian Electricity Regulatory Commission signed the regulation on March 8, saying it takes effect from the same day. But its actual implementation by the power distribution companies (Discos) began last Tuesday.

Objective

NERC said MAP would encourage the emergence of independent and competitive meter service providers in Nigeria’s electricity market, through which more consumer meters could be deployed to the distribution networks. It said the regulation would help to eliminate the controversial practice of estimated billing, which is as old as the sector itself, and which has been widely criticised as an avenue used by the Discos to swindle their customers through irregular calculation of consumption figures and payments.

MAP, which recognises the business opportunity that exists in the wide metering gap in Nigeria’s power market, should attract private investments in the provision of metering services and effectively close the metering gap through accelerated meter roll out in the Discos’ networks.

NERC reported that as at August last year, the total number of customers registered by the 11 Discos as eligible electricity users within their respective networks was 7,476,856, and those metered were 3,451,611. This leaves a metering gap of 4,025,611 as well as a collective metering percentage of 46.16 per cent.

MAP would also seek to boost revenue assurance in the market as regards the Discos being able to scientifically collect revenues for power sold to their consumers, as against relying on estimated methodology, which has remained quite controversial both from the Discos’ and consumers’ ends.

NERC said because the Discos, which are responsible for meeting up with their metering targets by ensuring that all their eligible customers are completely provided service meters, had failed in this regard, it had to think up an alternative, hence MAP. According to the commission, the possibility of closing the metering gap is very likely once it concludes its on-going customer enumeration exercise.

NERC mandated the Discos to engage the services of MAPs in accordance with the provisions of the regulation to meet their metering targets specified by it.

MAP would allow for third-party investments in meter infrastructure within the 11 Discos’ networks, and successful MAPs in any of the distribution networks would be given operational licenses by the regulator that would last for 15 years.

Metering Debate

Most unmetered residential customers of the Discos believe the Discos gain more by charging estimated rates than having them metered to ensure accuracy in consumption and payments. These consumers believe the Discos are comfortable with the practice of estimated billing. But the Discos think otherwise. Overtime, the Discos have claimed that the amount of financial investment needed to close up the metering gap in their networks is huge and that the market cannot provide them that. They say this has hampered their ability to reduce their losses with their metering plans as expected of them in the service level agreements they signed upon taking over the Discos.

Accepting that metering was a big deal in the power market, and needed to be resolved as soon as possible, the Discos note that provision of this to all their registered consumers is difficult due to the huge financial requirement. Their association, Association of Nigerian Electricity Distributors (ANED), told THISDAY recently that the lack of cost reflective tariffs had limited their capacity to invest in metering. The group also noted that meters installed by them had been subjected to abuses by customers.

“Meter fraud is huge – by-passing, tampering, recoding, and hook-ups. It is a big issue to us, even in places we had installed meters already,” said Executive Director for Research and Advocacy, ANED, Mr. Sunday Oduntan.

Oduntan explained, “Major scale organised meter fraud has to be combatted by tamper proof meters – split unit and pre-paid installed in areas already fully enumerated.

“For the area being metered, all the transformers and sub-transformers must first be metered to create an audit trail of accountability. Disco must be reorganised around feeders and sub-feeders and every connection on every feeder must be traced and enumerated into our customer database.

“Database has the capability to monitor consumption (and lack of consumption) by individual meters to detect meter fraud, and by sub-feeder and feeder to identify corrupt staff. Until this is in place, metering will not work, most will simply be by-passed.”

Requirements

According to NERC, the existence of MAP would not stop the Discos from continuing with their metering obligations to their customers. It says the regulation stipulates that the minimum technology and back-office requirements expected of the MAPs to be engaged by the Discos must be sufficient enough with relevant technological resources that capable of maintaining and retrieving records of financial, inventory, and customer data.

NERC noted that MAPs must also be able to deploy infrastructure on an on-line real-time basis that would be sufficient for regulatory and statutory reviews. The commission also expects that the technology type deployed by MAP shall be capable of being integrated to the distribution licensee’s vending platform, in addition to evidence of applicable certifications.

The distribution licensee, it added, shall conclude the procurement process for the engagement of a MAP within 120 calendar days from the day the regulation became effective.

According to NERC, “The commission shall engage the services of a tender auditor to audit the conduct and results of a distribution licensee’s procurement process for the engagement of the MAP. Upon completion of evaluation of bids, the successful bidder shall submit an application for the grant of a Meter Asset Provider license to the commission.

“The commission shall grant a license to the successful bidder subject to satisfactory compliance with the minimum qualification criteria and procurement processes provided in these regulations. The tenure of MAP license shall be 15 years in the first instance.”

The commission stated that upon the completion of the approval procurement process and a grant of MAP license, the distribution licensee would be allowed to enter into meter service agreement with the successful bidder. It said MAP shall source not less than 30 per cent of its contracted metering targets from local meter manufacturing or assembling companies in Nigeria.

The regulation equally listed the obligations expected of the Discos, MAP and consumers in this regard. It said, among others, the Disco shall include a metering service charge as a clear item on the billing of its customers provided with meters and this shall be separate from the energy charge.

For the MAPs, the regulation grants legal ownership of the meter asset until fully amortised through payment of a metering service charge by beneficiary customers, as well as right to be paid in full the aggregated metering service charge paid by customers during the billing cycle.

For the customers, the regulation stipulates that in addition to getting a meter installed for them, they are entitled to periodic inspection of meters to ensure integrity and reading accuracy. Where required, the MAP regulation also stipulates that the service provider must repair or replace faulty meters within two working days of being notified of such faults.

Caution

Experts in the electricity industry believe the MAP initiative is a good approach for accountability and efficiency in power supply. But they say it needs to be carefully implemented.

A former head of the Nigerian Bulk Electricity Trading Plc (NBET), Mr. Rumundaka Wonodi, stated that MAP could become a good method for attracting additional funds into the power sector, which has lacked third-party funding for a long time. But Wonodi warned that certain aspects of MAP were not clear and needed to be clarified by the regulator. For instance, he stated that there was need to clarify the operational guidelines and, perhaps, create a standard template for negotiating agreements under the MAPs. He also said the fact that an accurate data on the customer base was still non-existent could make it difficult for investors in the MAPs to take clear investment decisions.

According to Wonodi, “The regulation is okay, but there is need to have the operational guidelines that will detail the relationships better, if not, it is too high-level for implementation.

“There is a little more work that needs to be done to provide guideline, standard templates of agreement so that the bickering will stop. And, you have to consider if there should be a need for pilot phase before the Discos start signing it off for every person. Instead of trying to cover all the Discos, there should be one for a learning curve.

“The structure looks good but it needs tweaking. We have not done enumeration, so without it, it is difficult to know exactly the rate of penetration. Enumeration is key and a pilot programme for each Disco would have been a nice way to start.”