BEVERLY HILLS, May 19 (THEWILL) – The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has declared that eligible power consumers are now free to purchase electricity directly from power generation companies, GENCOs.
By this major policy directive, consumers have now been empowered to buy electricity directly from a licensee other than power distribution companies, DISCOs, who had recently opposed the move.
Explaining the development which is not enjoying the support of DISCOs, the Head, Public Affairs Department at the Nigerian Electricity Regulatory Commission, NERC, Dr. Usman Abba Arabi, said the declaration was in line with provisions of Section 27 of the Electric Power Sector Reform Act 2005.
He added that the provisions permitted eligible customers to buy power from a licensee other than electricity distribution companies.
Prior to the latest declaration by Fashola, all electricity consumers in the different categories get their supply from the power distribution companies.
The Association of Nigerian Electricity Distributors, ANED, had through their spokesperson, Mr. Sunday Oduntan, argued that eligible customers “can be declared by the minister only when a competitive market exists in the Nigerian electricity supply industry”.
ANED, however, stated that such a competitive market, driven by efficiency, presence and utilisation of industry contracts, was not existing at the moment.
Although the DISCOs admitted that the minister, under Section 27 of the EPSR Act, 2005, had the authority to determine end-user customers, who then constitute eligible customers, it insisted that Section 28 of the Act required that the Discos must be compensated for any reduction in their ability to “earn permitted rates of return on their assets,” or any inadequacy in their revenues as a result of such determination.
The power distribution firms, therefore, warned that the move would have an effect on consumers, adding that “What this means is that consumers will have to suffer an increase in their electricity tariff to accommodate this premature declaration of eligible customers”.
Speaking in Abuja, Arabi explained that the new policy directive would bring into play new and stranded generation capacities, which might be contracted between the generation companies and eligible customers.
His words, “In exercising the power conferred on him by the said Act, the Honourable Minister of Power Works and Housing, directed the Nigerian Electricity Regulatory Commission (the Commission) to permit four categories of customers to buy power directly from a licensee other than electricity distribution companies.
“The first category of eligible customers comprises of a group of end-users registered with the Commission whose consumption is no less than 2MWhr/h and connected to a metered 11kV or 33kV delivery point on the distribution network and subject to a distribution use of system agreement for the delivery of electrical energy.
“The next category of eligible customers are those connected to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy.
“Other category of customers under the declaration consists of those with consumption in excess of 2MWhr/h on monthly basis and connected directly to a metered 33kV delivery point on the transmission network under a transmission use of system agreement.
“Eligible customers in this category must have entered into a bilateral agreement with the distribution licensee licensed to operate in the location, for the construction, installation and operation of a distribution system for connection to the 33kV delivery point.
“The last category are eligible customers whose minimum consumption is more than 2MWhr/h over a period of one month and directly connected to the metering facility of a generation company, and has entered into a bilateral agreement for the construction and operation of a distribution line with the distribution licensee licensed to operate in the location.
“The new policy directive is expected to bring into play new and stranded generation capacities which may be contracted between generation companies and eligible customers.”
The declaration further provides that at least 20 per cent of the generation capacity added by the existing or prospective generation licensees to supply eligible customers must be above the requirement of the eligible customers.
NERC noted that the supply shall be under a contract with a distribution or trading licensee at a price not exceeding the average wholesale price being charged electricity distribution companies by the Nigerian Bulk Electricity Trader Limited.
“The conditions for the declaration of eligible customer is subject to review by the Nigerian Electricity Regulatory Commission from time to time,” the regulatory body added.
