The Nigerian Electricity Regulatory Commission has declared that electricity distribution companies that fail to pick up at least 95 per cent of the energy provided for two consecutive months will face penalties.
The commission disclosed this in a new regulatory instrument cited as Addendum
1 to the Order on Performance Monitoring Framework for Distribution Companies published on its website on Tuesday.
Under the new regulation, any defaulting Disco will forfeit five per cent of its administrative operational expenditure for the following quarter.
This measure is part of NERC’s broader initiative to enhance accountability and improve the overall management and performance of the Discos, ensuring more efficient distribution of electricity across the country.
It also directed that failure to meet two months’ compliance targets will attract enforcement actions, including withdrawal of “fit and proper” approval of the Disco’s Chief Finance Officer.
“Fit and proper” approval is a process to determine if a person or entity is suitable for a role or function.
The document stated that the directive is based on the order issued on the Performance Monitoring Framework for electricity distribution companies on July 5, 2024, which became effective on December 23, 2024.
The Order seeks to ensure compliance with the Key Performance Indicators.
These include accountability by the Discos’ management, increased operational performance, improved energy delivery to customers, and customer satisfaction.
Section 12(c) of the Orders on Performing Monitoring Framework July 2024, Orders; NERC/2024/086/096, states that “the commission may issue updated targets, attainment trajectories and review periodicity for any of the KPIs, having regard to the evolution of the wider NESI and overarching policy environment.”
The document read in part, “Following the issuance of an Order on Performance Monitoring Framework for Electricity Distribution Companies on July 5, 2924, the Nigerian Electricity Regulatory Commission has issued an Addendum 1 to this Order, effective December 23, 2024.
“The Order seeks to ensure compliance with the Key Performance Indicators. These include accountability by the Discos’ management, increased operational performance, improved energy delivery to customers, and customer satisfaction.
“In addition to the performance obligations and customer service guidelines in the earlier Order to the Discos, Addendum 1 reviewed three of the KPIs as follows:
“Penalty for default in energy offtake reviewed from one month to two months per quarter: Failure to offtake up to 95 per cent of available nominated energy in two out of the three months per quarter attracts a downward adjustment of Discos’ administrative operational expenditure by five per cent for the next quarter.
“Failure in reporting using the Uniform System of Accounts reviewed from monthly to two months per quarter: Failure to meet two months compliance targets attracts enforcement actions including withdrawal of “Fit and Proper” approval of the Disco’s Chief Finance Officer or its equivalent position.
“Timeline to comply with complaints resolution through NERC Contact Centre and NERC HQ reviewed from two months compliance target by DisCos. NERC now expects a 75 per cent resolution rate for all complaints within a quarter.
The commission explained that the updated enforcement framework will be applied from the first quarter of 2025.
“NERC shall issue Rectification Directives for all compliance issues for the three affected KPIs for Q3 and Q4 2024. The updated enforcement framework contained in Addendum 1 Order shall be applied from Q1 2025.”
It added that the order is to drive increased operational performance from DisCos, thereby improving delivery to customers under the Discos’ franchise areas and “reinforce market discipline and ensure that Discos’ commercial performance sets them on the path of long-term financial sustainability.”
