Feel free to bypass DisCos, Fashola tells electricity consumers

Minister for Power, Works and Housing, Babatunde Fashola, has said that electricity consumers are now free to bypass Distribution Companies (DisCos) and buy electricity directly from generation companies.

The Minister made the declaration in a statement by the Nigerian Electricity Regulatory Commission (NERC) over the weekend.

In the statement, Fashola also described the four categories of eligible customers in the Nigerian electricity supply industry.

According to him, the declaration is a major policy directive in the industry, targeted to empower the consumers to buy electricity directly from licenced generation companies other than the power distribution companies.

Fashola explained that the new directive is backed by the Electric Power Sector Reform Act 2005.

Before his declaration, Nigerian electricity consumers got supplies from the power distribution companies (Discos).

“The declaration, which permits electricity customers to buy power directly from the generation companies, is in line with the provisions of Section 27 of the Electric Power Sector Reform Act 2005, whereby eligible customers are permitted to buy power from a licencee other than the electricity distribution companies,” the statement said.

In exercising the power conferred on him by the said Act, the minister directed the commission to permit four categories of customers to buy power directly from licencees other than electricity distribution companies.”

The first category of eligible customers, NERC noted, comprised of a group of consumers registered with the commission whose consumption was not less than two megawatts-hour/hour and connected to a metered 11 kV or 33 kV delivery point on the distribution network.

These customers must be subject to a distribution use of system agreement for the delivery of electrical energy.

The commission noted that another category of eligible customers are those connected to a metered 132 kV or 330 kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy.

Explaining further, NERC stated: “Other category of customers under the declaration consists of those with consumption in excess of 2 MW hr/h on monthly basis and connected directly to a metered 33 kV 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 33 kV delivery point.”

The last category, according to the statement, are eligible customers whose minimum consumption is more than 2 MWhr/h over a period of one month and directly connected to the metering facility of a generation company, and have 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 statement disclosed 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.

NERC said that the declaration provides that at least 20 percent of the generation capacity added by the existing or prospective generation licencees to supply eligible customers must be above the requirement of the eligible customers, saying 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 statement said.

Fashola’s statement came after spokesperson for the Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, condemned the plan, noting that eligible customers “can be declared by the minister only when a competitive market exists in the Nigerian electricity supply industry.”

According to Oduntan, the DisCos must be compensated for any reduction in their ability to earn permitted rates of return on their assets, as well as any inadequacy in their revenues as a result of the minister’s declaration.

“What this means is that consumers will have to suffer an increase in their electricity tariff to accommodate this premature declaration of eligible customers,” he had said.

Earlier, the minister had threatened to sanction the power firms over breach of agreement and epileptic power supply.

Speaking at a meeting in Jos, Fashola had condemned the continual complaints from DisCos about the state of equipment before taking over, saying the DisCos should find solution instead of complaining.