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Power firms to refund customers who buy transformers, others

By BusinessNews Staff on October 11, 2014

Customers who finance the acquisition of power assets may start getting back their money from the respective electricity distribution companies from December this year, the Nigerian Electricity Regulatory Commission has said.

The affected power assets include electric poles, transformers and other equipment.

According to the commission, a regulation that will mandate the Discos to refund the money to customers who invest in electricity distribution assets will be published by the end of November and its implementation will be enforced.

The Commissioner, Market Competition and Rates, NERC, Mr. Eyo Ekpo, who disclosed this in an interview with our correspondent, said it was wrong for consumers to purchase power assets without being refunded by the Discos.

NERC’s reaction was prompted by complaints from power consumers who purchase electric poles, transformers and other equipment on behalf of the Discos and never get a refund for the purchased assets.

“Nobody in any civilised country should pay for the assets that serve that person. So, we now have this framework; we have consulted on it, gone through the necessary process, done the internal work and we have finally got all the comments. We are now working on analysing it and at the end of November, we should publish that regulation,” Ekpo said.

He noted that the commission had factored all capital costs of power assets into the electricity tariff paid by consumers, and as such, it was unjust for the Discos to pocket the funds invested in equipment that they never purchased.

The NERC commissioner said, “It is common knowledge that people have been buying power assets but the problem with that is that even though you are helping yourself, you are giving an asset to a Disco on which it will now recover the cost of that asset and pocket it. Meanwhile, the Disco did not spend that capital cost. It will of course incur the cost of operating it and cost of depreciation, which is money set aside so that in the future you can buy the asset when it has worn out.

“But the capital cost, which is also part of the tariff, is not the Discos’ to recover. It should go to the person that paid for the asset. But because there is no framework previously, the Discos were just collecting all that money without accounting for it and without any clarity as to how those that paid should be refunded. This is not supposed to be so.”

Ekpo gave an assurance that by the end of next month, “NERC will formally clear the regulation and will effect it. We have discussed it as a commission and we have decided to make sure that money spent by customers to purchase power equipment is repaid by the Discos.”

[Punch]

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