NERC refutes claim of suspension of eligible customer regulation

Oredola Adeola

The Nigerian Electricity Regulatory Commission (NERC), has refuted claim of suspension of the Eligible Customer Regulations (“ECR”) it issued in 2018, rather, the Commission claimed the letter to the Market Operator which was in circulation was a regulatory directive restraining the TCN from recognising unauthorised eligible customer transactions in the market settlement statement without the prior approval of the Commission.

Babatunde Raji Fashola, former Minister of Power, Works and Housing, had in 2017 introduced the ECR as a regulatory framework that allows “eligible” customers to do ECR if they have facility large enough to accommodate 2 megawatts per hour (2MW/H) and above consumption capacity.

That provision requires that the customer is connected through a 33 kilovolts (kV) power distribution line or a 132kV transmission line.

TCN had in a letter dated August 3, 2021 to all the Eligible Customers, notified that the companies will have their power connection terminated immediately, and that customers who comply with the provisions of the Eligible Customer Regulations may avail themselves of the bilateral contracting opportunities presented by the intent of the provisions in the EPSRA and the ECR.

NERC had been alleged to have given directive to the TCN for discontinuation of supply to certain customers under the ECR. It has been alleged that the DisCos have been kicking against the policy from inception. It was reported that the Port Harcourt Electricity Distribution Company (PHEDC) in a letter to NERC in June, complained that Olam Crown Flour Mills (formerly Dangote Flour Mills) exited PHEDC’s network and was recognised as an eligible customer by TCN – an action which is against the provision of the ECR.

The articles further reported that the Transmission Company of Nigeria Plc (“TCN”) has been directed by the Commission to disconnect certain customers as a consequence of the suspension of the said regulations.

However, NERC, in a statement released to EnergyDay via mail from Mr. Usman Abba Arabi, General Manager, Public Affairs Department stated that the Commission has not issued eligible customer status to any customer of the DisCos because they could not meet certain requirements, and in compliance with the NERC directive.

The Commission said that the Eligible Customer Regulations (“ECR”) has NOT been suspended and at no time has it issued a directive for discontinuation of service to any customer.

It said, “The ECR was developed and approved by the Commission, pursuant to a declaration made by the Honourable Ministry of Power as provided under section 27 of the Electric Power Sector Reform Act (“EPSRA”).

“The regulations provide for conditions for the grant of eligibility status by the Commission. The Commission further issued the guidelines for filing for competitive transition charge (“CTC”) to account for loss of revenue by DisCos in compliance with section 28 of the Act.

“In this regard, electricity consumers across the country that comply with the provisions of the Eligible Customer Regulations may avail themselves of the bilateral contracting opportunities presented by the intent of the provisions in the EPSRA and the ECR.

“The Commission has noted references to our letter to the Market Operator and being referred to as a directive for discontinuation of supply to certain customers. We wish to state that this was a straightforward directive of the industry regulator restraining the TCN from recognising unauthorised eligible customer transactions in the market settlement statement without the prior approval of the Commission.

The Commission further directed all unauthorised EC transactions to revert to BILLING by the distribution companies (“DisCos”) operating in the franchise area
where the customers are located but without disruption in supply until the customer is conferred with eligibility status pursuant to the requirement of the ECR.

NERC further noted that whereas the majority of these customers pursuing EC status have always been served through 132kV transmission lines, the billing of the customers resides with the distribution companies (“DisCos”) unless a customer elects to purchase energy under the framework of the ECR.

Addressing the Eligible Customer status NERC said the Regulations was designed to provide a very simple process for securing eligibility status from the Commission for customer whose consumption is in excess of the minimum threshold of 2MWh/h over a period of one month.

The key conditions for the grant of the EC status according to NERC are :- “Evidence of no indebtedness to DisCos: An eligible customer applicant is obligated to show that it is not indebted to the existing supplier before it can be conferred with eligibility to switch a supplier of electricity. Many of the applicants for eligibility status are, however, unable to provide this evidence
due to a pending settlement dispute with their respective DisCos.

“ The supplier (GenCo OR trading licensee) to the potential eligible customer should possess an unencumbered generation capacity to sell to other customers.

“Evidence of an agreement with the supplier of last resort in compliance with sections 37 and 38 of ECR. This is to ensure a continuity of supply to the eligible customer, in the event of a disruption by the contracted GenCo.”

NERC stated that the aforementioned conditions provided in the light-handed EC regulations
issued by the Commission are designed to preserve the structure and orderliness of the electricity market while opening opportunities for competition and better service for consumers.

It said, “Electricity consumers meeting the consumption threshold of 2MWh/h wishing to avail themselves of the opportunity of purchasing electricity from sources other than DisCos are encouraged to apprise themselves of the guiding regulations of the industry and not rely on the presumption of compliance.

“GenCos wishing to sell electricity to consumers under the eligible customer framework are mandatorily required to possess an unencumbered generation capacity for sale to other consumers.

“The public is further invited to note that a number of eligible customer applications before the Commission are stalled by the inability of either the applicants or their potential suppliers to fulfil the conditions precedent for grant of eligibility in compliance with sections 5, 6, 23, 37 and 38, and schedules 1A & 1B of ECR.

These conditions according to NERC are easily within the reach and control of the applicants and the potential suppliers. It stated that other reasons constraining the grant of eligible customer status to some major consumers of electricity include various litigations and/or objections to applications filed with the Commission.

The Commission has further stated that it is committed to opening up the electricity supply industry for competition and new investments and to grant timely approvals to all applicants who have met the conditions for eligibility status as provided in the eligible customer regulations.

Earlier, the Association of Nigerian Electricity Distributors (ANED), had dismissed claims that the Distribution Companies (DisCos) had convinced the Nigerian Electricity Regulatory Commission (NERC), to suspend trading of electricity under the Eligible Customer Regulation (ECR) 2017, which states that customers using over 2 megawatts hour per hour (MWh/h) who have NERC’s approval can get their electricity from the Generation Companies (GenCos), rather than through the traditional electricity market route which involved the entire electricity value chain.