There’s no conspiracy against South East, says former NERC boss
South East consumers of electricity are regularly made to pay more for power usage because of high costs of operations being reported by Enugu Electricity Distribution Company (EEDC), according to a former chairman of the National Electricity Regulatory Commission (NERC), Dr. Sam Amadi.
Dr. Amadi dismissed insinuations in the social media that electricity consumers in the region have been targeted by NERC for arbitrary high tariffs.
He explained that electricity prices approved by NERC during its periodic adjustments are based on factors such as amount of power, number and profile of consumers, as well as various operations and maintenance costs.
“Inefficiency, otherwise called losses, also constitute a significant part of the costs,” he said, and added that the EEDC had in the past exploited the “collection losses” factor to enjoy high tariff approvals.
“The simple reason is that EEDC has a higher cost profile than the other DISCOs and this results in a bigger revenue requirement” which ultimately leads NERC to approve a higher tariff for EEDC.
To underscore the point, Dr. Amadi recalled the difficulties he had when, at a point, the tariff for the South East rose by 180 percent for a particular consumer class “because Enugu Disco posted very high collection losses.
“We removed the losses (zeroed it out) and asked them to come with evidence to prove the accurate levels of losses that is credible and proven.
“The discos and BPE challenged us and said it contradicts their contract signed for privatization.
“We refused to back down and published the tariff as such.
“Some APC members falsely accused us of reducing tariff to favor Jonathan (which was) totally false.
“When President Buhari came to power, the discos complained bitterly and some of them threatened to declare force majeure.
NERC was forced to return the collection losses, he said.
“Enugu has very high collection losses and it partly accounts for this higher tariff,” Amadi explained.
EEDC battles twin challenges
Apart from the coming high tariff, EEDC is currently facing litigations, public protest and social media bashing since it gave its consumers a rude New Year present by asking them to discard their prepaid “standalone” meters in place of “smart” ones that it will supply on request – a ploy to get the customers to pay for the metering devices.
EEDC compounded matters by asking customers with standalone prepaid meters to revert to manual “estimated” billing system while they wait for their applications for the new meters to be approved and installed.
Power consumption under the old manual billing system was not only arbitrarily determined but led to corruption in the system when officials accepted bribes to do their work.
It was amidst the meter controversy that a new tariff regime that will take effect on 1 April was announced.
The south east region will see an increase of a staggering 75 percent of electricity price for home consumers in the region, when the new tariff takes of in April, a condition not unconnected with the explanation on collection losses.
The Way out for the South East
Facts coming to light now suggest that because EEDC habitually presents a very high profile to the regulator, it is seen as having a bigger revenue requirement which will lead to approval of a higher tariff.
“There’s no conspiracy against the southeast and it is not necessarily caused by Emeka Offor (chairman of EEDC),” Dr. Amadi concluded and called it “a legacy problem that needs a review, (to be) solved by a comprehensive tariff rebasing.
“I believe that our regulatory intervention of requiring proof of collection losses would have taken care of this or contributed to a proportionate tariff regime for southeast. The large disparate may then be less.”
The former NERC boss said that the collection losses factored into electricity pricing will always provide a challenge.
“Yes, the way we approved those tariffs when I was there does not give me 100% satisfaction of clarity and prudence. That’s is why I removed the collection losses and people abused me.”
The way out, Dr. Amadi suggests, is for South East consumers to “insist on public consultation to ascertain (EEDC’s) cost profile.”
The opportunity to do so will be when NERC comes around for its periodic public consultation.
“Thankfully NERC has said it will mandate consultation,” Amadi concluded.