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Tag: NERC

  • Power drops by 700Mw as govt shuts gas plants

    Power drops by 700Mw as govt shuts gas plants

    • NERC slashes fixed charge for DISCOs

    Nigeria is expected to witness a major blackout following the shut down of the Utorogu and Ughelli East gas infrastructure in Delta State.

    The Minister of Power, Prof. Chinedu Nebo, said in Abuja yesterday that the gas plants would be shut for 20 days for routine maintenance and upgrade.

    Utorogu and Ughelli East gas plants, owned by Shell Petroleum Development Company (SPDC) joint venture (JV), produce between 300 and 120 million standard cubic feet per day of gas (mmscf/d), and generate about 500 megawatts (MW) and 200MW to the national grid.

    With the shutdown of the plants, power generation will drop by at least 700Mw reducing supply from the grid to just above 3000Mw.

    The minister said the action is in line with efforts to consolidate on the successes recently recorded in improved electricity supply to homes and businesses in many parts of the country.

    A statement signed by Prof. Chidiebere Onyia, Senior Special Assistant (SSA) to the minister said the planned shut down which began yesterday, will be completed on  June 22, 2014.

    The government assured that on completion of this scheduled maintenance and upgrades, the facilities will be re-commissioned hence it will improve gas production and ensure quality output from the lines to the power plants.

    Prof Onyia’s statement said on-going maintenance will slightly affect power plants fed by these gas facilities which also include Egbin and Omotosho power stations.

    The statement explained that the maintenance work that is being carried out by the Nigerian Petroleum Development Corporation (NPDC), is regrettable, just as the Minister requested understanding and support of Nigerians in the arduous task of revamping the sector.

    The two gas plants were shut down at the same time in 2011 to repair leaks suspected to be caused by vandals.

    Also the maintenance of Ughelli, which feeds Ughelli power plant, is good news for Transnational Corporation of Nigeria Plc (Transcorp), the new owner of the power plant. Transcorp has changed the name of the power plant to Transcorp Ughelli Power Limited (TUPL), and plans to increase power generation from the asset from the current level of about 200MW capacity to 1000MW within the next three to five years.

    Meanwhile, following the 2014 review of Multi-Year Tariff Order (MYTO) customers of Benin Electricity Distribution Company (Benin DISCO) commenced the implementation of a 50 per cent reduction on fixed price yesterday, the National Electricity Regulatory Commission (NERC) has said.

    Its Chairman, Dr. Sam Amadi,   said Benin DISCO consumers now pay N750 fixed charge instead of N1,500.

    The company tops the list as the highest reduced fixed charge followed by Yola Distribution Company (Yola DISCO’s) which customers who now enjoy 40 per cent fixed charge reduction. Yola DISCO’s customers now pay N750 instead of N1250.

    In a statement titled: NERC lowers fixed charge for electricity consumers, he said the development is in line with the review of the MYTO.

    Amadi had explained in a press briefing that the reduction diifrential is as a result of the fact that the power companies operate under different cost structures.

    According to the NERC, Kaduna Disco Fixed Charge got reduced by 39 per cent from N1,280.00 to N781.13, while thar of Abuja Disco was  reduced by 29 per cent from N985.92 to N702.11.

    “Enugu Disco – Fixed Charge (got) reduced by 26 per cent from N874.50 to N650.  Eko – Fixed Charge (was) reduced by 34 per cent from N1,125 to N750. Jos – Fixed Charge reduced by 34 per cent from N1,162.50 to N775.

    “Kano – Fixed charge reduced by 25 per cent from 889.50 to 669.90;

    Yola – Fixed Charge reduced by 40 per cent from N1250 to N750; Port-Harcourt – Fixed Charge reduced by 33 per cent from 1050 to N700; Ikeja – Fixed Charge reduced by 17 per cent  from N899.50 to N750; (while) Ibadan – Fixed Charge reduced by 20per cent from N781.13 to N624.95.”

  • Electricity tariff to go up from June 1

    Electricity tariff to go up from June 1

    There is bad news for electricity consumers. Tariff is set to go up from June 1, followingthe review of the Multi Year Tariff Order (MYTO) for 2014.

    Nigerian Electricity Regulatory Commission (NERC) Chairman Dr. Sam Amadi told reporters in Abuja that “the review has reduced fixed price charge component of the tariff”.

    Explaining the implication of the review, he said Abuja Electricity Distribution Company’s R2 customers, for instance, who have been paying N13.75 per unit will pay N14.90. The fixed charge remains unchanged, he added.

    This is an indication of N1.15k for customers in the R2 category. The NERC however, said that the full details of the review will be made public on the Commission’s website.

    According to him, some positive variables culminated in the significant changes in the tariff review. He said: “Whilst MYTO in 2012 had projected a 13 per cent inflation rate, it was by March 30, at 7.8 per cent, less than 5.2per cent of the projection; exchange rate of $1 to N178 from CBN data was also less as at March 30 to N157.30 per $1, 11.6per cent less than projected.”

    Amadi said the review result however, indicated a reduction of the wholesale tariff payable to generation companies (Gencos) from June 1 adding that with increased generation capacity and favourable economic indices, tariff cost will drastically reduce.

    Amadi added: “Many customers by 1st June should be paying a fixed charge (FC) of about N1,500 but the adjustment has resulted in a decrease in that the fixed charge will not change but will remain at N750.”

    On the energy charge for the 2014 MYTO, Amadi, said: “What we will see is that most of the consumers did not have any increase in their EC apart from Residential Two (R2) customers that have N1 increase in some places.

    So instead of having a much more bigger Energy Charge (EC) increase that was published for 2014 MYTO since 2012, we now have the same fixed charge of N750 from the supposed N1500 which means a huge reduction and then a slight increase of about N1 or so for only R2 customers,” he said.

    He noted that R2 customers in Ikeja Distribution Company (Disco) are more in a cluster so the cost is cheaper, “and when they calculated the average with the cost of price, their energy charge came down lower.”

    Amadi stated that although wholesale generation cost reduced, transmission and distribution component of the tariff is high resulting in the slight increase in the Energy Cost for most R2 customers.

    He maintained that NERC’s review principle follows a rule-based approach that gives confidence to the investors and also protect consumers against arbitrary charges.

    The power investors and financial institutions that advanced credits to them before the privatization of the assets, have been calling for upward review of electricity tariff to match cost of output and also help them  (investors) recoup their investment on record time.

    According them, revenue collections from the consumers are far much lower than they (investors) expected pre-asset handover. The poor collection, the investors added, is also worsened by the technical and commercial losses, which are greater than the assumptions given them by the Bureau of Public Enterprises (BPE) before the assets were handed over.

    The MYTO (Multi-Year Tariff Order) provides a 15 year tariff path for the Nigerian Electricity Supply Industry. The MYTO methodology sets out the basis and pricing principles by which the tariff of different categories of consumers are fixed or determined. It also determines load allocation to different electricity distribution companies, the closest value chain to consumers. The MYTO usually have major review every five years but June of every year, a minor review is carried out by NERC. The review is determined market fundamentals.

    The residential customers’ tariff especially R1 and R2 under MYTO are subsidized by about 50 per cent by the government because they are categorized as customers with very low incomes. Their consumption, however, is subsidized with charges from other classes of customers, according to MYTO provision.

    The tariff review began as a result of agitation from market participants (licensees in generation, transmission and distribution) and prospective investors who felt that some of the technical and financial considerations in the tariff calculations needed to be re-examined.

    The first set of tariffs under MYTO 1 was introduced in July 2008, while current MYTO2 begun on June1, 2012, and by 2016 MYTO 3 will begin. Depending on the state of the Nigerian Electricity Supply Industry (NESI), a major review will take place in 2016 to reflect on the market  and afterwards, minor reviews would continue year through the next five years.

    The Tariff Review began as a result of agitation from Market Participants (licensees in generation, transmission and distribution) and prospective investors who felt that some of the technical and financial considerations in the tariff calculations needed to be re-examined.

    “The MYTO II is developed on basis of predictable energy receipts and onward sales. In the current situation of low generation, power can be dispatched in an open and transparent manner.

    Disco’s maximum loading (distribution) capacity is a militating factor, even when there is adequate supply, some Disco’s may not be able to distribute beyond certain threshold. This also necessitated abandoning uniform percentage value for initial allocation,” NERC said.

  • NERC warns DISCOs for flouting directive

    NERC warns DISCOs for flouting directive

    The Nigerian Electricity Regulatory Commission (NERC)  has came down hard on eight electricity distribution companies ( DISCOs)  for failing to report their obligations to the regulator.

    NERC’s Head, Public Affairs Department, Dr. Usman Abba Arabi, said the action was in disregard of its directives. It will soon enforce the relevant section of the Electricity Power Reform Act (EPSR Act of 2005) on reporting obligation, the commission said.

    NERC expressed reservations on the compliance level of DISCOs in the reporting and submission of data that would allow it do proper network data assessment.

    The reporting obligation as contained in part 10, section 94(2) of the Electricity Power Sector Reform Act (2005) states that any person who fails, or refuses to furnish a return or to supply information in the manner and time prescribed, or gives false or incomplete information commits an offence and is liable on conviction.

    Its Chairman and Chief Executive Officer, Dr. Sam Amadi, said the CEOs had been told at their April meeting to comply with the Commission’s request on submission of baseline statistics on distribution assets they took over.

    According to Dr. Amadi, there is a need for network data assessment to establish a data bank of all existing distribution assets, monitor, track and report performance of the DISCOs with respect to strengthening of distribution systems and capacity expansion as well as facilitate expansion and development of the distribution networks.

    He urged the DISCOs to improve on their performances and make necessary adjustments, adding that a similar exercise with the Transmission and Generation Companies will soon be carried out.

    “Discos are to note their performances and make necessary adjustments to ensure timely and accurate reporting. Similar exercises would be conducted for Transmission and Generation Companies,” Amadi said.

    This is the first time NERC is assessing the utilities on their key performance indicators (KPIs) since they took over six months ago.

  • NERC reduces 60% charge for GENCOs as revenue dips

    NERC reduces 60% charge for GENCOs as revenue dips

    The Nigeria Electricity Regulatory Commission (NERC) has reduced 60 per cent capacity charge for the Electricity Generation Companies (GENCOs) due for this month following losses of revenue in the industry.

    The Managing Director, Egbin Power Plant, Mr. Kenneth Uzoigwe disclosed this  yesterday while crying out to the Minister of Power, Prof Chinedu Nebo over the firm’s loss of N570million revenue due to lack of gas and electricity meters.

    He said: ”NERC has tried to encourage the generation companies mitigating the loss of revenue, by allowing us take away 60 per cent of this month of our capacity charge. Even the market operator is not what it should be. We are just accumulating debt.”

    He urged the Federal Government to act urgently to arrest the situation.  Uzoigwe noted that the current revenue profile of the firm from  November 1 to date, is a daunting data for would-be investors.

    He said: “Our experience after privatisation has been undesirable . Let me just use that mild word because as at the end of last month,  our books showed that we were losing revenue to the tune of N570million doing business from  November 1 to date . “The revenue profile in the industry is very poor. And if other investors look at it, it may give results that may not be desirable for the country.“

    Uzoigwe who spoke during the minister’s visit to the NERC office in Abuja, noted that despite the investment of N7billion in the power plant that has 1,180 Mega Watts (Mw) generating capacity, the station can only generate 600Mw.

    He regretted that Egbin Power Plant cannot take advantage of its economic of scale in the industry.

    The CEO said: “One thing is to have available capacity another thing is to have reliability. We have brought Egbin to the point where it is reliable for 1,180Mw. But Hon. Minister, in the last  three months, we have been generating only about 600Mw and we can’t take advantage of economies of scale in the business we are doing. We are losing revenue continuously.”

  • NERC hailed over fixed charges directive

    The directive that power distribution companies should stop collecting the N750 fixed charges from consumers who do not enjoy power supply for a cumulative period of 15 days will boost the confidence of consumers, stakeholders have said. They include the Director, Infrastructural Development, Manufacturers Association of Nigeria (MAN), Reginald Odiah and former Chairman, Community Development Council (CDC) in Surulere, Lagos, Olukayode Adeyemi

    Odiah said the new power investors and NERC are on the path of restoring confidence into the sector by improving electricity supply. He said consumers’ confidence has waned, following the epileptic power supply and inability to resolve the problem.

    He said privatisation and policies introduced by the Commission to address billing problems are good ones capable of restoring confidence in the industry.

    The investors, and other stakeholders in the sector are making efforts to proffer solutions to the lingering power problems, adding that the directive is a relief to consumers.

    He said: ‘’ With time, the sector would get over infrastructural challenges facing it and produce the required energy for growth.  Once the gas problem is solved, the turbines would help in improving electricity generation. Thereafter,  distribution companies would supply electricity with ease.’’

    Also, Adeyemi said huge charges is one of the problems facing consumers, noting that NERC has boosted industry’s confidence by stopping DISCOs from collecting fixed charges from consumers who do not enjoy electricity for sometime.

    He said illegal disconnection and irregular power supply are a big problem in the sector, adding that the development made the residents of Iponri Estate and its environs to organise a protest least week.

    ‘’ We have made up our mind to stop illegal disconnection in the estate and other areas. We would resist  any official who disconnects light illegally in the area. We have reported the matter to the District Manager of Eko Electricity Distribution Company (EKEDC) in Masha. We would not hesitate to deal with the company‘s staff who disconnects our light wrongly, ”he added.

    He said residents spend about N9.5million monthly to fuel their generators, adding that the problem is affecting them.He said the cost of providing energy is high, adding that it impacted  negatively on cosnumers.

  • Consumers decry increase in fixed charges

    There is concern among consumers over possible increase in fixed charges by the Nigerian Electricity Regulatory Commission(NERC) in June.

    The development is coming on the heels of the commision’s decision to review the yearly fixed charges for residential and corporate consumers in June.

    Consumers, who spoke with The Nation, said any upward review of the charges would further compound their woes.
    A partner at Paul Usoro &Co ( A law firm), Laidi Munirudeen, said the country is in a terrible situation, following the inability of the government to find a lasting solution to the power problem.

    Munirudeen said consumers were paying for electricity they cannot access, adding that they are tired of the situation.

    He said there is no cheering news from the sector, despite of the billions of naira realised from the sale of Power Holding Company of Nigeria (PHCN). He said fixed charges had been increased from N500 in 2012 to N700 last year, arguing that any increase would compound the woes of consumers.

    He said: “It is not an over-statement to say the sector is in a sorry state. In fact, all indices point to the fact that the sector is sick. Of what benefit is the huge bills paid by consumers every month without getting the right value. In my company, we use generators 24 hours, which means we spend a lot on diesels. When you factor the cost of obtaining alternative energy into the production cost, you realise all your profits have gone.’’
    Also, the Chief Executive Officer,New Horizon Computer Limited, Tim Akano, said NERC should be talking of how to cut down all charges and not increasing them in view of the problems facing the consumers and the sector in particular.

    “Already consumers are paying huge bills. Any attempt to upwardly review fixed charges, as stipulated in the MYTO guidelines would worsen the conditions of consumers. In the Information and Communication Technology (ICT) where I work, a lot of money is required to power computers and other devices for the training of people on various skills. This implies that a lot of money goes into generators, aside huge bills paid companies,’’ he said

  • Power firms move to stop estimated billing

    Power firms move to stop estimated billing

    In line with the Nigerian Electricity Regulatory Commission (NERC) directive to power firms to provide metering plans and further reduce charges imposed on consumers, the management of the 11 power Distribution Companies (DISCOs) are fashioning out modalities to stop estimated billings and further ensure that consumers pay fair prices.

    The General Manager, Customer Services, Ikeja Electricity Distribution Companies (IKEDC), Ms Olubukola Ojuronpe, said the firms have, as part of their growth plans, want estimated bills to be stopped soon.

    Ojuronpe said each of the firms have expressed displeasure at the poor metering system in the country, and are ready to put a stop to huge charges.

    She said: “The new owners are angry with estimated billing. They do not want to see anything estimated billing again. They frown at the development, and want to put a stop to it to enable consumers have confidence in the system. They also share in the pains experienced by consumers at all levels.

    “KEPCO, the Korea-based technical partners to Ikeja Electricity Distribution Company would bring in meters in May 2014. The meters are going to be cost-effective and better, and would be given to as many consumers as possible. This is our own way of stopping estimated billing and further makes consumers to pay the right price.’’

    According to her, the movement from the state-owned electricity corporation to privately run power institutions ensures that good, efficient and cheaper services are provided to consumers to gain their confidence.

    ‘’Before, contractors are supplying meters on behalf of the government. But now, there is a paradigm shift from government to private companies’ electricity management system. Based on this, consumers must be treated fairly to encourage the industry’s growth,” she added.

    She said the new power investors are not happy with the developments in the sector, urging consumers to be patient with them. Power, she said, would improve as Ministry of Power, NERC, Chief Executive officers of the power firms and other stakeholders are meeting to proffer solution to the lingering power problems.

  • NERC approves interim rules for transitional electricity market

    NERC approves interim rules for transitional electricity market

    The Nigerian Electricity Regulatory Commission (NERC) has approved and signed into law, the rules for the interim period between completion of privatisation and the start of the Transitional Electricity Market (TEM).

    The order which was signed by its Chairman and Chief Executive, Dr. Sam Amadi provides for regulation which shall apply to energy produced and delivered as well as associatd services during the interim period.

    According to a statement yesterday, the rules are in exercise of the powers conferred on the NERC by section 96 of the Electric Power Sector Reform Act (2005).

    NERC added that the Interim Rules are intended to cover all electricity taken from the transmission system by the distribution companies (DISCOs) with adjustment made to account for any bilateral arrangements between generation companies (GENCOs) and distribution companies (DISCOs).

    The statement noted that existing arrangements shall be maintained to the extent that they are modified by the order of the Commission.

    It added that the objectives of the rules are to establish a framework to govern trading arrangements during the Interim period when Power Purchase Agreements (PPAs) between the privatised Power Holding Company of Nigeria (PHCN) successor generation companies and Nigerian Bulk Electricity Trading Plc (NBET) and Vesting Contracts between NBET and the privatised PHCN successor distribution companies will not be effective.

    The commission also said that it is to manage the probable revenue shortfall in the industry by determining the revenue allowable to participants and service providers during the interim period.

    According to the statement: “The objectives also include the establishment of payment arrangements and flow of funds from DISCOs through the market operator to all beneficiaries and to establish the sources of funds required to ameliorate the probable shortfall in the revenues collected by the DISCOs during the interim period.

    “The market operator shall ensure the DISCOs with invoices for their allocation of energy delivered and available capacity regulatory charges and services provided in each month during the interim period.

    “In the event of disputes arising during the period between participants and service providers, it shall be resolved in accordance with the disputes resolution provision of the market rules.

    “Also in this same vein, the Commission has under the powers conferred upon it by section 96 of the EPSR Act 2005 approved the Enforcement Regulation for the Nigerian Electricity Supply Industry.”

  • Nigeria can meet power needs by 2016, says NERC chair

    Nigeria can meet power needs by 2016, says NERC chair

    Nigeria’s quest for regular power supply is attainable before year 2016, Chairman Nigeria Electricity Regulatory Commission (NERC), Dr. Sam Amadi has predicted.

    Already he said the Commission has issued licences to independent private power plant operators for generation of over 20,000 megawatts (Mw) of power within the next three years.

    Amadi who was a quest speaker at a town hall meeting on power sector organised by The Redeemed Evangelical Mission (TREM Church)in Minna, Niger State yesterday said with 12,000 Mw, the nation’s power need can be met.

    “Life has thaught us that nothing is impossible. We can make 30,000 Mw within the next one year if we want. Already we have issued licences to investors to generate over 20,000 Mw before 2016. I am sure that with all the efforts put in place our power generation will surely surpassed our target by 2016,” the NERC boss assured the nation.

    He said the huge foreign investment in the sector in recent time was a product of the reforms and regulations put in place by the government.

    “The sector has been without frame work, no cost related terms and inconsistency in policy had been the order of the sector but it is now being regulated. This has built confidence in investors which in turn will boost the sector and our national generation level,” he said.

    Amadi complained that the sector suffered decades of total neglect and appealed for understanding from Nigerians as the result of the reforms in the sector will be gradual, adding that new sources are being utilised to increase generation.

    He said gas is being considered as another veritable means of power generation but stressed that the gas sector requires a review. He added that more incentives need to be given to encourage the use of gas for power generation, instead of selling it off as liquified natural gas (LNG).

    Amadi expressed concern over the volume of gas flared daily in the country. He said: “The best way to stop gas flaring, aside the global cry for it stoppage is to give incentive to encourage the use of gas for the power sector.”

    According to him, the Commission has encouraged the distribution company (DISCO) in Port Harcourt to work with small entrepreneurs in the area on the possibility of setting up small generation units using gas being flared as the source.

    Aside from this, the NERC chairman said DISCOs are being encouraged to establish small modular power generating plants of between 10 and 20Mw outside the national grid network.

    On the contentious monthly service charge levied on electricity consumers by various DISCOs, the NERC boss said the commission has directed that no payment should be made when electricity is not supplied for upwards to two weeks and above.

  • Electricity generation to hit 12,000mw by 2016

    Electricity generation to hit 12,000mw by 2016

    Nigeria Electricity Regulatory Commission (NERC) has said electricity generation nationwide would hit 12,000 mega watts before the end of 2016.

    Its Chairman, Dr Sam Amadi, spoke in Minna yesterday at a town hall meeting.

    Amadi said that this would be made possible as the commission had issued licence to private power plant operators for generation of over 20,000 megawatts of power within the next three years.

    “Life has thought us that nothing is impossible, we can make 30,000 mega watts within the next one year if we want.

    “Already we have issued licence to investors to generate over 20,000 mega watts before 2016.

    “I am sure that with all the efforts put in place, our power generation will surely surpass our target by 2016,” he said.

    Amadi said that the huge foreign investment on the sector in recent time was a product of the reforms and regulations put in place by the government.

    He said the power sector had been without framework without any cost related terms and inconsistency in policy that had been the order of the sector, but it was now being regulated.

    “This has built confidence in investors, which in turn will boost the sector and our national generation level,” he said.

    Amadi said the sector had suffered decades of neglect and appealed for understanding.

    He said the commission had directed consumers not to pay any service charge to the distribution companies any time power was not supplied for two weeks.