NERC Threatens DisCos with Sanctions Over Electricity Load Rejection

NERC Unveils App To Improve Electricity

The Nigerian Electricity Regulatory Commission (NERC) has expressed deep concern over the consistent electricity load rejection by power distribution companies (Discos) despite widespread blackouts in various parts of Nigeria.

In response to this, NERC has issued a stern warning, threatening to impose regulatory sanctions on Discos failing to meet key performance targets for electricity offtake. The regulatory body emphasized that the growing disparity between available power capacity and customer demand is a critical issue that must be addressed promptly.

In its latest quarterly report for Q3 2023, NERC highlighted the Partial Activation of Contract regime, initiated in July 2022, which defined the target volume of energy that Discos must off-take at any given time as their Partially Contracted Capacity (PCC). Discos, under this regime, have take-or-pay obligations on their PCC, meaning they must pay for available power capacity regardless of their offtake.

NERC pointed out that despite the expectation that Discos would offtake their Partially Contracted Capacity at all times, many Discos do not take their full PCC due to technical limitations and load rejection, often driven by commercial reasons. To address this issue, NERC included load offtake as a key metric in its Key Performance Indicator (KPI) Order, effective from October 2022.

The commission’s KPI Order stipulates that persistent load non-offtake beyond certain thresholds may trigger regulatory actions against the management of non-compliant Discos. Additionally, Discos with offtake ratios below 100 percent incur increased wholesale energy costs, as they still have to pay for unused capacity.

Analysis of the report revealed that, during Q3 2023, all Discos, except Eko and Ibadan Discos, took less than their available PCC. Eko and Ibadan Discos recorded offtake performances of 112.25 percent and 105.55 percent, respectively, benefiting from reduced wholesale energy costs.

NERC affirmed its commitment to utilizing the Order on Performance Monitoring Framework to enforce appropriate regulatory actions against Discos failing to meet the KPI targets for the offtake ratio. The commission’s situation room will continue to analyze daily energy offtake performance and intervene with Discos as required.

Consumer advocacy groups have criticized the ongoing load rejection by Discos, especially considering the inadequate power supply experienced nationwide. The NERC is urged to enforce disciplinary sanctions that compel power distributors to improve electricity supply across the country. The situation underscores the need for efficiency and accountability in the power sector to ensure reliable electricity access for consumers.

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