NERC allows compensation claims for electricity outages

Electricity customers can demand compensation for lost hours when power distribution companies fail to supply contracted hours under the Service-based Tariff system, the regulator says in their current order.

As electricity distribution companies (DisCos) agitate for an increase in tariffs, their inability to fulfil their obligations to deliver service based on their contracts with customers brings into question their right to demand improved terms.

Last month, the Nigerian Electricity Regulatory Commission (NERC) issued an order on the migration of customers and compensation for service failure under the service-based tariff framework. Still, the charge is largely ignored by the operators and customers, even as NERC has yet to meet its obligation under the order entirely.

The order provides in section 6 that the “Commission shall evaluate the average availability of the 11kV and 33kV feeders as measured by the average number of hours of electricity supplied by a DisCo per day over one month.

“Where it is established that the service level on a feeder in bands A to D has failed to meet up to 90 per cent of the committed service levels within one month, the prepaid customers on the affected feeders shall be compensated with a token for units of energy in kWh to account for the difference between vented tariff and the applicable tariff for the actual services experienced in the month.

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It also provides that “postpaid customers whose bills are issued with a one-month lag following the period services were rendered, the resulting bill of the postpaid customers of the affected feeders shall be issued with the adjusted applicable tariff based on the actual service experienced during the period.”

Inquiries show that DisCos have primarily ignored this order, and even most customers are not filing the required report. Some say even the rules are not enforced by the regulator who drafted them. This leaves customers who are supposed to be shielded against exploitation vulnerable.

According to NERC’s data, it is not that customers are not complaining about service failures. In the fourth quarter of last year, the Commission recorded 261,278 complaints, 15 per cent of which were about service interruption.

Analysts say the Commission has to do more to earn the regulator’s trust so that they can file complaints.

“I think it is a function of trust -trust for the Discos, which is lacking, trust for the regulators to be able to “enforce”. People will have to trust NERC more, as they have to mediate in the sector,” said Adetayo Adegbemle, founder of PowerUP, a consumer rights advocacy, non-profit.

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NERC introduced the Service-Based Tariff plan in July 2020, but it could not take effect until December due to the challenges with COVID-19 and labour protests.

Under the plan, customers are grouped in different tariff bands according to the number of hours of power supplied daily, with the highest receiving 20 hours or more paying between N45 and N55 kwh, and the poorest people getting less than four hours of supply daily seeing no increase in their tariff.

These tariff rates have since risen by over 30 per cent under MYTO rules that require a bi-annual yearly review of tariffs to reflect the realities of gas prices, inflation and foreign exchange volatility.