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Enugu Disco negotiates with customers on tariff review

By on September 2, 2015

In line with the guidelines approved by the Nigerian Electricity Regulatory Commission (NERC) for public consultations by the distribution companies before applying for tariff review, Enugu Electricity Distribution Company (EEDC) recently concluded negotiations with electricity customers in Abia, Anambra, Ebonyi, Enugu and Imo States.

EEDC’s proposed tariff review will be for a 10-year period from 2015 to 2025 and the company has also pledged to avoid tariff shock by deferring some of its allowable revenue in the early years to later years.

The consultations, which were held in Enugu, Abakaliki, Aba, Umuahia, Onitsha, Awka, and Owerri between July 23 and August 12, 2015, were well attended by EEDC’s residential, commercial, industrial and special customers.

The Head, South East Zonal Office for NERC, Mr. Sam Ekeh and Mrs. Clementina Nwigwe from the Consumer Protection Council, as well as members of the Manufacturers Association of Nigeria (MAN) were also in attendance.

The purpose of the meetings was to improve the understanding of customers and stakeholders on the process of setting tariffs, the factors involved, and most importantly to receive feedback and input into EEDC’s tariff review process.

The meeting also served to expose customers to EEDC’s on-going efforts and plans to improve its quality of service and explain its current challenges.

In one of his lead presentations at the consultative meetings, the Managing Director and Chief Executive Officer of EEDC, Mr. Robert Dickerman noted that the tariff review was crucial to the sustainability of the entire electricity business supply chain.

“Since electricity generation companies and Transmission Company of Nigeria do not charge customers directly for their services, the tariffs charged by every distribution company must support the effective operations of the distribution company, transmission company and generation companies,” he said.

The Deputy Managing Director of EEDC, Mr. Tope Borishade noted that “on average, 60 per cent of the amount billed to each customer is for the generation companies and 15 per cent is for the transmission company and other service providers. The remaining 25 per cent is for the operation of the distribution company,” he added.

The company used the opportunity to stress that appropriate tariffs would enable it to pay the generation and transmission companies so as to enable them make required investments or raise the capital needed to do so.

Reacting to the tariff review proposal, a cross section of the customers applauded EEDC for arranging the meetings and for its efforts at improving its services.

However, many customers expressed dissatisfaction with the company’s estimated bills, absence of meters, delay in repairing faulty transformers, prolonged power outages and fixed charges.

Some customers also emphasised that the company should improve its services before considering a tariff review and that if services improve, the tariff be well received.

But in his response, Dickerman announced that EEDC had commenced procurement and installation of meters for its Maximum Demand Customers while the procurement and installation of pre-paid meters for its single-phase and three-phase customers is at advanced stages.

He explained that the delay in the role-out of EEDC’s metering programme was due to the high incidence of meter by-pass and meter-tampering experienced in prior exercises. The new program needed to be designed to avert the by-pass and tampering of the new meters.

In addressing the issue of estimated bills, Borishade explained that EEDC will install meters for all its customers and stop estimated billing, in line with its existing business plan.

He further explained that until all its customers have meters, customers without meters will continue to receive bills that will be estimated in line with existing industry regulations.

The company also explained that it had earmarked N25 billion for investment in Geographic Information Systems (GIS) and enumeration of customers and assets in its license area, deployment of 750,000 pre-paid meters, Advanced Metering Infrastructure (AMI) Platform, transformers, construction of relief substations and network expansion.

According to the company, these investments will go a long way in reducing its aggregate technical, commercial and collection (ATC&C) losses and addressing many of its customers’ complaints.

On the controversial issue of fixed charge, EEDC explained that fixed charge is a necessary component of electricity tariffs, adding that it is necessary to support the Capacity Charges for the generation companies, as well as, capital, maintenance and fixed costs of other electricity market participants.

EEDC had equity capital of N33 billion at the handover of the company to Interstate Electrics Limited on November 1, 2013 and has since invested in distribution network equipment, acquisition of new distribution transformers, expansion of its network and construction of relief substations.

The tariffs that were in place between November 2013 and December 2014 were inadequate to support the industry and this led to a revenue shortfall in excess of N210 billion.

EEDC received N10.2 billion out of N213 billion CBN intervention fund and is obligated to repay N35 billion with interest over the 10 year period..

Generally, the meetings provided enabling environments for better understanding between EEDC and its customers.

 

[ThisDay]