DisCOs rip off customers with false promise of regular power supply using faulty tariff bands

THE Tariff Band Methodology deployed by Nigeria’s electricity distribution companies (DisCOs) to promise regular power supply is misleading and unrealistic, and the DISCOs have used it to rip off customers without supplying commensurate power to them.
Going by the band methodology in the Multi-Year Tariff Order (MYTO) 2020, the current pricing arrangement which was approved for the DisCOs by the National Electricity Regulatory Commission (NERC), consumers are expected to pay cost-reflective tariffs which are determined by the level of electricity supply they receive from the distribution companies.

Before the introduction of the band methodology, there had been five tariff classes for electricity consumers in Nigeria, namely:

• Residential (R1, R2, R3, R4)

• Commercial (C1, C2, C3)

• Industrial (D1, D2, D3)

• Special (A1, A2, A3)

. Public Street Lighting (S).

However, with the introduction of the band methodology following the issuance of Service Reflective Tariffs (SRT) in 2020, DisCOs classified electricity consumers in bands A, B, C, D and E, according to the levels of power supply to be received by consumers.

Consumers on Band A were promised a minimum of 20 hours of power supply per day.

Those on Band B were guaranteed to receive at least 16 hours of electricity supply each day.

Band C consumers were assured of a minimum of 12 hours of electricity supply per day.

Consumers on bands D and E – the lowest classes on the electricity supply chain – were promised eight and four hours of power each respectively per day.

Going by the band methodology, consumers on higher bands pay higher tariffs for kilowatts or units of energy than those on lower bands.

In the same vein, Band B consumers will also pay higher for electricity than those on lower bands. The higher the band, the more the consumer pays for electricity and this ‘cost-reflective’ payment arrangement is based on the promise that consumers are paying for services they received.

However, investigations conducted by The ICIR, as part of the Regulators Monitoring Programme (REMOP) of the Wole Soyinka Centre for Investigative Journalism (WSCIJ), has shown that consumers are being shortchanged and ripped-off because the DisCOs are not meeting up with the promised hours of electricity supply upon which the band methodology was based.

As a result of the development, consumers, particularly those in the higher bands, are paying higher tariffs for electricity which they are not receiving.

For instance, a customer on Band A in Abuja under the Abuja Electricity Distribution Company (AEDC) is promised 20 hours of power supply, according to the MYTO 2020 tariff that is currently being operated in the Nigerian power sector.

But records of daily power generation and consumption show that for five months or more, the DisCOs in, many instances, have not met the Band A promise of 20 hours daily power supply. Yet the customers continue to pay high costs for this band, without any clear mechanism to be either stepped down to a lower tariff band, or refunded the over-payment.

Records from the Distribution Load Profile dashboard published by the Independent System Operator (ISO), a section of the Transmission Company of Nigeria (TCN) that manages the national grid, shows that AEDC is not meeting its designated allocation on which basis the Service Reflective Tariff tagged MYTO was computed.

*Inadequate level of power generation contributes to DisCOS’ inability to meet obligations to consumers

Power generation in Nigeria is far below what it ought to be. As far back as 2016, Sunday Oduntan, Director of Research and Advocacy for the Association of Nigerian Electricity Distributors (ANED), the umbrella body of the country’s electricity distribution companies stated: “With a country that has a population of over 160 million, and going by the rule of thumb for electricity provision all over the world, we need to generate 1,000 megawatts (mw) per one million citizens. This means Nigeria needs about 160,000mw to have 24 hours uninterrupted power supply across every nook and cranny of the country.”

According to the tariff arrangement computed from September to December 2020, AEDC should get 11.5 per cent of the daily average generation of 4,650mw. The tariff arrangement also projected that average daily generation should have improved to 4,970mw by June 2021. The AEDC is also supposed to get 11.5 per cent of the projected 4,970mw.

But grid operation records obtained from daily monitoring of the System Operator’s distribution load profile dashboard shows that daily generation has not improved to 4,970mw – the projection upon which the Service Reflective Tariff was computed. Instead, average power generation profile has been hovering around 4000mw most days, a development which means that AEDC’s allocation has fallen short of the load supply computation required to meet the level of power supply promised consumers in line with the MYTO.

This volume reaches 450mw or even 500mw and at times, drops to 375mw.

Grid power operation records from the ISO, monitored over a period of one month, showed that average power generation had been lower than 4,000mw most of the day, about 600mw drop from the computed power generation factor and therefore insufficient for the DisCOs to meet promised obligations to consumers in line with the tariff band methodology.

READ MORE HERE: https://www.icirnigeria.org/discos-rip-off-customers-with-false-promise-of-regular-power-supply-using-faulty-tariff-bands/

Estimated billing is the highest level of crime been practiced in the country today.