Nigeria’s regulatory body for the electricity sector, the Nigerian Electricity Regulatory Commission (NERC), says that any customer of a distribution company that has not enjoyed cumulative or continuous electricity supplies for 15 days in a month should not have to pay any fixed charges on electricity bills.
The NERC says this review of the retention of such components in electricity bills, if provided that the disruption of electricity to the consumer was not due to non-payment of electricity bills or sabotage. Consumers in Nigeria have long complained about exploitation through tariffs included in electricity bills under the guise of fixed charges, particularly where electricity was not delivered.
NERC has the responsibility of ensuring that the tariff charged by the operators is not only fair to consumers, but also sufficient to allow the operators finance their operations and allow for reasonable earnings for efficient services.
The retail tariff payable by the consumers is divided into the energy charge and the fixed charge. While the fixed charge recovers the capital cost and fixed operations and maintenance cost of the various utilities in the industry, the energy charge depends on the level of electricity consumed, payable only when electricity has been consumed. It is intended to help operators in the market recover the cost for fuel, variable operation and maintenance costs and a portion of the tax cost incurred.
The success of Nigeria’s distribution sector will be critical in helping enable Nigeria to source the estimated US$35 billion it requires to achieve a government target of 40,000 MW by 2020.