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FIXED CHARGES : NERC Dares Senate, Charges Not Illegal

Despite Cancellation By The Senate, Nigerian Electricity Regulatory Commission Says Fixed Charges Have Come To Stay While There Will Be No New Electricity Connections Without Meters

The Nigerian Electricity Regulatory Commission (NERC) yesterday stood against the abolition of the Fixed Charges (FC) and insisted that there is nothing illegal about them.

This is even as the Commission has urged communities that are placed on bulk billing to not only reject it, but also insist on individual metering. The Commission also revealed that it has abolished the connection of new customers without meters.

According to Chairman of the Commission, Dr. Sam Amadi, the Fixed Charges, which appear in different names, are not peculiar to Nigeria as they are part of the electricity markets across the world.

He however, pointed out that the legacy problem of lack of generation capacity, which results in poor supply of electricity, could be the difference with Nigeria’s situation.

Amadi’s reaction came on the heels of the query from the Upper Chamber on the fixed charges, estimated billing and sundry issues. He explained that the purpose of the fixed charges was to recover the capital and fixed costs of various operators in the electricity industry. “NERC respectfully argues that the Fixed Charge that consumers pay in the Nigerian electricity market is not illegal or necessarily fraudulent.

Fixed Charges (appearing in different names) are part of electricity markets across the world. “The difference in Nigeria could be that we don’t have a good supply of electricity because of the legacy problem of lack of generation capacity.

Therefore, consumers often pay Fixed the Charges for epileptic or no power supply. “Electricity consumers in Nigeria pau both Fixed and Energy charges.

The purpose of the Fixed Charges is to recover the capital and fixed costs of the various operators in the industry. “Section 32 of the EPSR Act 2005 mandates the Commission to approve a tariff that allows investors recover their prudent costs with reasonable return on the assets invested in the business.

The operators invest in assets on regular basis and recover their investments through the Fixed Charges paid by the consumers. “In addition to this, it should be noted that once an asset is bought and a consumer is connected to the network, the investors are by law expected to recover the costs of their investments whether energy is supplied or not,” Amadi said, adding that the charges are not tied to consumption.

On the issue of the practice of bulk billing residential customers, Amadi added that the Commission has already abolished it on a previous ruling brought before it by a customer against the duo of the VGC Estate Management and the Eko Electricity Distribution Company (EEDC) in 2008.

“The decision of the Commission stipulated that every customer is expected to be metered individually, irrespective of the status of supply coming into the area, and the class of billing should be on R2 or as appropriately determined by the Disco. “The Commission has, however, provided a leeway for estimation in situations where residential meters are not provided to customers.

In this instance, statistical meters installed as transformer substations are used to calculate the energy to be used as basis for estimating customers on the feeders. Communities, which are placed on bulk billing, should reject it, and insist on individual metering,” he urged. He hinted that a public consultation on a proposal to cap the amount an unmetered customer can pay until a meter is in the process of being completed by the Commission.

“The proposal will also commit Discos to strict deadlines for metering of all its customers. In the interim, the Commission has abolished connection of new customers without meters,” he added.

The UNION reports that the Senate, had last week Tuesday, directed the Commission to immediately put an end to the Fixed Charges, which are being collected from electricity consumers across the federation, following the numerous complaints before the Commission by electricity consumers.

The Senate’s directive was sequel to a motion entitled: Unfair Trade Practices of Electricity Distribution Companies in Nigeria, which was sponsored by the duo of Senator Sam Egwu and Senator David Umaru. “The distribution companies, since the takeover of their operations, have been ripping off consumers through (the) Fixed Charges and bulk metering across the country.

Some areas in the country are still billed through the estimated billing system, which doesn’t make provisions for payment of only electricity that is consumed, even though bills are dished out without commensurate services being offered by the distribution companies”, Egwu noted, while delivering the motion on the floor.

Egwu, who alleged practices of arbitrariness, despite government’s efforts, observed that the present economic situation in Nigeria may not allow the downtrodden Nigerians access one of the very basic needs of life. “Despite all efforts by the government, however, there has been constant level of arbitrariness, whereby electricity consumers are charged extortionate rates, fixed rate, based on the use of the billed meters installed by the then Power Holding Company of Nigeria (PHCN).

“With the present economic situation in Nigeria, a lot of Nigerians (particularly the downtrodden) would not be able to access one of the very basic needs of life (electricity). This billing system is also capable of ruining the economic power of most small scale business that requires electricity to function,” he added.



-Teddy Nwanunobi, Abuja

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