Discos Get 85% Collection Order — Economic Confidential
Tariff Increase: Discos Get 85% Collection Order
The Nigerian Electricity Regulatory Commission has directed power distribution companies to collect an average of about 85.84 per cent of the newly increased electricity tariffs from affected customers between September and December.
It disclosed this in its latest orders in the matter of the Extraordinary Review of Multi Year Tariff Order 2015, which were issued to the 11 Discos operating across the country.
Power consumers, however, kicked against the tariff hike and the decision by NERC to grant approval to Discos to collect as high as over 80 per cent of the newly increased tariff from customers.
In the orders to the Discos, which were jointly signed by NERC Chairman, James Momoh, and a Commissioner, Dafe Akpeneye, the commission stated that the new tariffs took effect from September 1.
Findings from the various orders to the 11 Discos showed that after NERC considered the key indices used in evaluating the tariff increase applications of the power firms, it approved an average of about 85.84 per cent as what the Discos should collect from customers affected by the hike in tariffs.
For the Abuja Electricity Distribution Company, for instance, the NERC said its end-use cost-reflective tariff from September to December was N57.01 per kilowatt-hour and put the AEDC end-use allowed tariff during this period at N50.05/kWh.
Based on this order, AEDC would collect 87.79 per cent as end-use allowed tariff from customers affected by the September 1 electricity tariff hike.
The power firm’s tariff shortfall during the period is 12.21 per cent.
Cost-reflective tariff is the tariff that will enable the Discos to recover their costs while the allowed tariff is what they are allowed to recover from their customers by the regulator.
The tariff shortfall will be funded by the Federal Government under the Power Sector Recovery Plan.
“The Federal Government, under the PSRP Financing Plan, has committed to fund the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs during the transition to cost-reflective tariffs,” NERC said.
Other Discos also had marginal shortfalls in the respective orders issued them by NERC.
For Benin Electricity Distribution Company, the NERC put its end-use cost-reflective tariff at N59/kWh, while its end-use allowed tariff was N50.05/KWh, meaning BEDC had been empowered to collect 84.83 per cent from customers affected by the tariff hike.
Enugu Electricity Distribution Company had its end-use cost-reflective tariff put at N56.76/kWh, while its end-use allowed tariff was N50.05, hence the Disco would collect 88.18 per cent as tariff regardless of the hike in the bill.
Also, Eko Electricity Distribution Company got approval to collect N47.9/kWh as end-use allowed tariff. EKEDC’s end-use cost-reflective tariff was N49.62/kWh.
It therefore implies that Eko Disco was allowed to collect as much as 96.53 per cent as tariff from customers affected by the recent hike.
The end-use cost-reflective tariff and end-use allowed tariff for Ibadan Electricity Distribution Company were N57.6kWh and N50.05kWh respectively, hence IBEDC would collect 86.89 per cent as tariff.
For Ikeja Electricity Distribution Company, it would collect 96.74 per cent, as its end-use cost-reflective tariff and end-use allowed tariff were N47.45/kWh and N45.76/kWh respectively.
Jos Electricity Distribution Company would be collecting much less than the 85.84 per cent average being collected by the 11 Discos.
Findings showed that JEDC’s end-use cost-reflective tariff was N76.13/kWh, while its end-use allowed tariff was N50.05/kWh, hence it would collect 65.74 per cent from affected power users in its franchise area.
The Kaduna Electricity Distribution Company’s end-use cost-reflective tariff and end-use allowed tariff were N57.22/kWh and N50.05/kWh respectively, meaning it would collect 87.46 per cent from its customers.
For Kano Electricity Distribution Company, NERC gave it an end-use allowed tariff of N50.05/kWh, while its end-use cost-reflective tariff was N55.73/kWh, hence it would collect 89.81 per cent tariff from affected customers.
Port Harcourt Electricity Distribution Company got an end-use allowed tariff of N50.05/kWh and an end-use cost-reflective tariff of N64.82; hence, its customers affected by the recent hike should be willing to pay 77.21 per cent of the applicable tariff.
Finally, Yola Electricity Distribution Company’s end-use cost-reflective tariff and end-use allowed tariff were N59.99/kWh and N50.05/kWh, meaning it would collect 83.43 per cent as tariff from affected customers of the September 1 tariff hike.
NERC had explained that not all power users were affected by the tariff hike, after in a surprise move, it approved an increase in electricity tariff with effect from September 1.
The increase came three months after the tariff hike implementation slated for July 1 was halted by the National Assembly, which prevailed on the distribution companies to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.
NERC stated that electricity customers, except those receiving less than 12 hours of supply, would have to pay more for electricity from September 1.
It explained that the new tariff was based on the hours of electricity supply available to the customers.
It stated that customers were categorised into maximum demand and non-maximum demand customers, as against the previous categories of residential, commercial and industrial customers, with different bands (A to E) depending on the level of supply.
For IKEDC, as an example, a residential customer on single-phase receiving a minimum of 12 hours of supply would now pay N45.76/KWh, up from N21.30/kWh.
The tariff hike and the end-use allowed tariff to be paid by customers as approved by the commission was, however, condemned by consumers.
The Secretary-General, Nigerian Electricity Consumers Advocacy Network, Uket Obonga, told our correspondent that the hike was unfortunate.
He said, “It is sad that even the Federal Government, the presidency will come out and tell Nigerians one thing and end up doing another. Are we saying that the National Assembly is not part of the Federal Government of Nigeria?
“We were told that the National Assembly worked with the presidency and the executive and agreed that the new tariff should be on hold until the first quarter of 2021.
“But now what they have done is condemnable, sad, unfortunate and means we have a government that is not by any standard sensitive to the sufferings Nigerians.”
Obonga said Nigeria was faced with economic crisis occasioned by the COVID-19 pandemic, adding that many businesses had been shut down for several months.
He described the tariff hike as policy summersault, adding that the amounts approved by the NERC as what customers should pay were outrageous.
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