We can’t abolish fixed charge; NERC tells Senate

The Nigeria Electricity Regulatory Commission (NERC) yesterday told the Senate that it cannot abolish the fixed charge.

NERC Chairman, Dr. Sam Amadi  said  the  National Assembly had passed the Electric Power Sector Reform  (EPSR) Act, which mandated the commission to produce a tariff methodology for the electricity market.

He argued that removing the fixed charge would contradict the law the National Assembly made on tariff methodology.

Amadi spoke with reporters in Abuja, noting that tariff making could not be an executive fiat.

He said: “The National Assembly made the ESPR Act and the Act said the commission should produce a methodology. Tariff making is a process-based activity. It is not an executive fiat. The reason why the law created the regulator is to give confidence to the market;  their decisions are procedural and the decisions are deliberately considered.

“Our decisions are in line with due process. Otherwise, the law should have left the sector under the control of  Ministry of Power the normal way it was with the ministry. So, it will issue an executive ruling. So, NERC cannot wake up in the morning and say we have abolished this. That will undermine the law that the National Assembly made.”

“Don’t forget that we were created by a clearly legislative-defined mandate. And one of the mandates is to create regulations that are done in a particular way. So, we cannot come and say we have abolished fixed charge.”

“We will always go through a process and the process is that before that Senate’s decision, we had commenced a process to remove the fixed charge in a way you understand it, then  allowing recoveries to be made as you consume.”

“Essentially, we are in line with the decision of the Senate. The Senate’s concern is the fact that people are paying for what they do not consume. And we are in line with the Senate; we are working with the Discos to remove that aspect of the pricing methodology. That is to make sure that people pay for what they consume and pay fair and reasonable charges determined through a process allowed by the law.

“We don’t think that abolishing a fee that is part of recovery is dangerous for the solvent of the Discos. But through a tariff review, the Discos can remove the fixed charge and find a way to recover those costs through the normal energy charge.”

Continuing, he said: “Communities that are placed on bulk billing should reject it and insist on individual metering. The commission is in the process of completing a public consultation on a proposal to capture the amount an unmetered customer can pay until he or she is metered. The proposal will also commit distribution companies to strict deadlines for metering of all their customers. In the interim, the commission has abolished connection of new customers without meters.”

Amadi said the commission monitors complaints reported to the Discos monthly,   to ensure that Discos carry out their responsibilities.

He noted that NERC, as a result of the monitoring, recently penalised the Abuja Electricity Distribution Company for over billing customers and ordered it to refund the customers.

The chairman added that the company refunded about 32,000 customers, ranging between N5,000 and N15,000 per customer, adding up to over N50 million.