NERC Scrutinises Discos’ Capital Spends Before Tariff Review

Chineme Okafor in Abuja
The Nigerian Electricity Regulatory Commission (NERC) would be taking a deeper look at how the 11 electricity distribution companies (Discos) have utilised the capital expenditure allowed for them in their respective existing tariffs before agreeing to sign off a new tariff for them, a quarterly report of the commission has disclosed.

Prepared for the 2017 third-quarter business period, the quarterly report indicated the capital expenditure review would be done to determine how cost-efficient they were with the expenditures they made for capital projects and acquisitions.
The report obtained from the webpage of the NERC, also noted that the efficiency level of billings and revenue collections of the Discos for the period were poor.

It linked the poor revenue collection showing of the Discos to consumers’ apathy to estimated electricity billing; inefficient distribution networks; illegal connection and non-collection of revenue by the Discos’ agents.
“While the government has commenced the implementation of a payment assurance facility for power generators as a means of sustaining generation levels, the commission has accordingly identified in its 2017-2020 strategic plan the actionable items towards addressing constraints in transmission and distribution networks.

“The planned strategy includes a thorough technical assessment of Discos’ utilisation of its capital expenditure allowances for relevance and cost efficiency and a tariff reset in order to stimulate investments in network infrastructure,” the report stated
According to it, “The level of billing efficiency during the third quarter indicates that for every 10kWh of energy received by a Disco from the transmission company, approximately 2.3kWh is lost due to technical constraint and illegal connection.

“In other words, for every N10 worth of electricity received by Discos, N2.30 is lost due to poor distribution infrastructure and energy theft.”
In terms of issues of safety in the country’s electricity network, NERC explained the rate of accidents and deaths by electrocution were still high, and that it initiated about 12 enforcement actions against its licensees in this regards.
“In the third quarter of 2017, the commission received a total of 47 health and safety reports from licensees. The reports indicated that there were 37 accidents during the period under review. The accidents resulted in 25 deaths and 15 injuries of various degrees involving both employees of the companies and third parties,” it stated.

Continuing, the report noted that, “The investigation of the accidents by the commission led to the commencement of twelve enforcement actions against the licensees whose negligence was found to be responsible for or have contributed to the accidents.”
It however warned that, “The commission takes safety of all electricity users and all other Nigerians very seriously and it is concerned about the relatively high number of incidences in NESI.
“Thus, the commission has included in its newly drafted strategic plan various safety enforcement mechanisms and programmes aiming at tackling recurring accidents in the industry.

“Among the safety programmes to be implemented by the commission are the standardisation of protection scheme, engagement of government agencies on Right of Way (RoW) violation, increased public enlightenment on safety, and review of operational procedures for Distribution System Operators (DSOs) on fault clearing,” the regulator added in its quarterly report.