Power Sector: DISCOs Object To NERC’s Fixed Charge Removal Order

power-plant-with-meterElectricity distribution companies have rejected the order for the removal of fixed charges by the Nigerian Electricity Regulatory Commission.

The order stipulates that a customer would not be liable to paying the fixed charge if he does not receive cumulative electricity supply for a period of 15 days in a month.

The multi-tariff order which commenced in 2012 provides that a retail tariff be paid by electricity consumers with two components; an energy charge and a fixed charge.

While the energy charge is for electricity consumed, the fixed charge is for capital cost, fixed operations and maintenance which consumers are compelled to pay whether or not electricity is supplied.

Following numerous complaints by electricity consumers, the Nigerian Electricity Regulatory Commission then put out the directive to distribution companies to stop fixed charges if electricity is not supplied for 15 consecutive days in one month.

This order has, however, caused uproar among electricity distribution companies. They claim that such an order would create chaos in the industry as there were still no statistical meters to determine which customers were supplied energy at any given time.

While some key players in the industry believe that the fixed charge be applicable only for energy supplied, other say there is the need to protect the DISCOs from running aground with unsettled costs.

The Chairman of the regulatory commission said that all relevant issues must be considered and a middle ground reached to ensure that the regulation on electricity charges is fair and balanced for licensees, consumers and investors in the industry.