By Muna Ugochukwu

HB.01: A BILL FOR AN ACT TO AMEND THE ELECTRIC POWER SECTOR REFORM ACT, 2005 TO PROHIBIT AND CRIMINALIZE ESTIMATED BILLING BY ELECTRIC DISTRIBUTION COMPANIES AND PROVIDE FOR COMPULSORY INSTALLATION OF PRE-PAID METERS TO ALL POWER CONSUMERS IN NIGERIA; AND FOR RELATED MATTERS (HB.1)

Sponsored by Hon. Femi Gbajabiamila

SUMMARY

Bill type: House Bill

Sponsored by Hon. Femi Gbajabiamila

Explanatory Memorandum

The Bill seeks to amend the Electric Power Sector Reform Act to prohibit and criminalize estimated billings by distribution Licensee and other related matters.

First Reading: 03/07/2019

Second Reading: 25/07/2019

Committee Referred to: Committee of the Whole

Status: Awaiting Committee Report

 

INTRODUCTION

This Bill is a landmark legislative intervention in the country’s troubled power sector as it seeks to effectively enforce the Nigerian Electricity Regulatory Commission (NERC) regulation to stop monthly estimated bills issued to consumers by the electricity distribution companies (Discos).

Notably, there have been prior regulatory interventions towards addressing the metering problem. For instance, NERC in 2012 introduced the Credit Advanced Payment for Metering Implementation (“CAPMI”) programme. However, this programme did not achieve the desired result. In 2016, the NERC directed Discos to conclude the metering of all maximum electricity customers in their network on or before November 2016. Recently, the NERC approved the Meter Asset Provider (MAP) Regulations. The MAP Regulations creates a procedure for Discos to work with MAPs towards meeting their metering obligations as specified by NERC. MAP provides for third party financing of meters and amortisation over a period of ten (10) years thereby removing the financial burden of providing meters from the Discos.

The NERC had contemplated the following regulatory options to cap monthly estimated bills issued to consumers by the Discos in November, 2018:

  • A cap on estimated billing based on the projected average monthly consumption of each tariff class in the Multi-Year Tariff Order model;
  • Application of the average consumption of each tariff class within a franchise area as the cap for estimated billing of unmetered customers; and
  • Capping the estimated bill of consumers within a business unit to the average vending of the same tariff class within the area.

Prior to this Bill, there was the HB 1384: Electric Power Sector Reform Act (Amendment) Bill, 2018 which was sponsored by Hon. Femi Gbajabiamila and passed the third reading on the 22nd of January, 2019 at the House of Representatives after the report submitted by the Committee on Power was unanimously adopted by the lawmakers following a public hearing on the matter.

Essentially, the Electricity Power Reform Act (Amendment Bill) 2019, like its predecessor, will make it a crime for power distribution firms to persist in their practice of foisting on Nigerians bills based on “guesstimates” and arbitrariness. It seeks to outlaw estimated billing and prescribes penalties for DISCOs that fail to supply prepaid meters to their consumers within 30 days of applying to be connected to power.

The Bill was outlined to provisionally capture the Terms of Office and conditions of service of Commissioners; Distribution licenses; and Offences and their commensurate punishments.

This Bill is cited as the “Electric Power Sector Reform Act (Amendment) Bill, 2019.”

 

Key Sectional Analysis

The Electric Power Sector Reform Act (Amendment) Bill, 2019 primarily seeks to introduce new sections and amend some existing sections of the Principal Act. The insertions to the Bill emboldened herewith; “All cases of illegal disconnection, refusal of the relevant Distribution Company to connect a customer after application, un-metering within thirty (30) days of a customer applying for a pre-paid meter and estimated billing shall attract both civil and criminal liability and any officer found guilty shall be liable to a fine of N500,000 (Five Hundred Thousand Naira) or imprisonment for a term of six (6) months or to both such fine and imprisonment as the Court may deem fit,are essentially aimed at achieving the following objectives:

  • prohibiting estimated billing and demanding that Discos install prepaid meters at consumers’ premises within thirty (30) days of receiving an application and the regulated fee for the prepaid meter. The consumers will have the option to pay for pre-paid meters through a Credit Advance Metering Implementation scheme. The Bill also makes it mandatory for all electricity charges or bills to be based on prepaid meters; and that consumers are not required to pay any bill without the meters first being installed at their premises;
  • placing an obligation on the Discos to write consumers, informing them on the nature of the meter installed, tariff methodology and other services available to the customer upon connection;
  • criminalizing and providing a penalty for the issuance of estimated bills and failure of the Discos to provide prepaid meters after receiving an application and payment from a customer.

The Bill also recommends six (6) months imprisonment or a fine of N1, 000, 000. 00 (One Million Naira) or both for any person who contravenes or “frustrates” the implementation of the Bill when enacted into law.

 

Pros

Firstly, by providing a legal framework, implementation of the provisions and subsequent reformation of the sector are emboldened and stand a better chance of guaranteeing the successes promised by its proposition.

There are complimentary efforts by the Minister of Power, Works and Housing, Babatunde Fashola, who announced the approval of 108 firms to share prepaid meters that align with the outcomes of the Bill. The decentralization of meter asset providers in the value chain of power suppliers will speed up provision of meters. Likewise, other government stakeholders like the NERC, share the sentiments of the legislative thus creating an opportunity for harmony in its implementation and forestalling any bureaucratic bottlenecks at the implementation phase.

Also, the prepaid metering system encourages and supports consumers to be more receptive to energy conservation practices, which leads to savings.

 

Cons

The HB 1384: Electric Power Sector Reform Act (Amendment) Bill, 2019 which was sponsored by Sen. Ahmad Ibrahim Lawan in March, 2019 in the 8th Assembly and passed in May, 2019, failed to receive Presidential Assent just like its Gbajabiamila-sponsored 2018 forerunner. Without a reason from the Presidency as to why assent was denied, there is no guarantee that there lies a political will to do so now.

Also, there are no committed intentions to address previous underlying issues with the Discos. The Discos have funding or liquidity problems which is largely attributed to their inability to charge cost reflective tariffs and this has hindered their ability to provide meters. They are also dealing with infrastructure challenges, energy theft and meter bypassing. In addition, the Multi-Year Tariff Order places some restrictions on the amount Discos can spend on capital expenditure.

Lastly, the portion of the Bill which seeks to apply criminal sanction to any person who “frustrates” the implementation of the Bill when passed into law but does not define what amounts to “frustration,” risks the chances of having unintended draconian consequences subject to its ambiguity.

 

Conclusion

There have been numerous regulations directed at the Discos to set the sub-sector operations right. A performance agreement executed between the Bureau of Public Enterprises and the core investors in the 11 Discos, provided for the installation of end-use meters based on agreed targets. However, the actual performance as at August 2018 indicated that about every six in 10 customers were unmetered and therefore, subject to estimated billing. The debate however shifted ingeniously to the need for “cost-reflective tariff”, which begs the question as to how cost-reflective tariffs can be determined if not by providing meters.

According to Hon. Gbajabiamila “Any regulation that allows estimation of bills when the actual consumption can be ascertained is against natural justice and equity and should not stand.” If the power firms in Nigeria have no motives of corruptly enriching themselves, prepaid metering is something to embrace wholeheartedly to ease revenue collection challenges.

However, the concerns of all parties in any agreement is key to the actualization of that agreement and as such, assisting the Discos overcome some of the challenges that have prevented them from complying with their metering obligations in the past should precede any implementation plan and enforcement of penalties or criminalization.

2019-10-08T11:08:16+00:00October 8th, 2019|Categories: Bill Analysis|0 Comments

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