NERC Regulation: Discos May Get Reimbursed for Losing Customers

The electricity distribution companies (Discos) may likely be compensated for losing customers to generation companies (Gencos) under the new eligible customers’ regulation of the Nigerian Electricity Regulatory Commission (NERC). Under the new regulation which NERC issued in November 2017, to govern the procedures for the supply of electricity to consumers under the categorization, Discos were expected to lose largely big customers on their networks to Gencos. However, the regulatory commission stated that a relief – the Competition Transition Charge (CTC), would be introduced to offset such loses by the Discos. The NERC in a consultation paper published on its web page, explained that the provision of CTC in the eligible customers’ regulation was legal, adding that the Electric Power Sector Reform Act (EPSRA) 2005 recognized it.

It thus said it expected stakeholders in the sector to respond to its proposal for the CTC in the consultation paper.
NERC said it was acting in line with Section 28 of the EPSR Act 2005 which provided that, “If the minister determines, following consultation with the president, that a directive under section 27 will result in decreasing electricity prices to such an extent that a trading licensee or a distribution licensee would have inadequate revenue to enable payment for its committed expenditures or is unable to earn permitted rates of return on its assets, despite efficient management, the minister may issue further directives to the commission on the collection of a competition transition charges from consumers and eligible customers.”

It noted that such decision was however subject to public consultation undertaken by it, hence, its request of input from stakeholders in the industry. According to NERC: “The CTC is the amount a distribution network operator (Disco) is entitled to collect outside its normal tariff to cater for loss of revenue or its inability to earn permitted rates of return on its assets arising from the exit of an EC (eligible consumer) from its network.”

 

Source: This Day

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