Regulatory policy

How the Eligible Customer Policy Can Boost NESI’s Efficiency

THE Eligible Customer regulation was in 2017, introduced this allows power generation companies (GenCos) and independent power producers (IPPs) to bypass the bulk trader, Nigerian Bulk Electricity Trading Plc (NBET) and distribution companies (DisCos) in sell electricity directly to “Eligible Clientsas defined by the rules.

This provision recognizes an end user or group of end users registered with NERC whose consumption is not less than 2 MWh/h

connected to a 11kV or 33kV delivery point measured on the distribution network, whose consumption is in excess of 2MWh/h on a monthly basis or whose minimum consumption is greater than 2MWh/h over a period of one month.

The regulation, among other objectives, aims to provide standard rules to facilitate competition in electricity supply promote rapid expansion of generation capacity, as well as the possibility of upgrading in the quality of supply while promoting third-party access to transport

and distribution infrastructure as a precursor to full retail competition in Nigerian electricity market.

But since the statement was made, little to no progress has been made, instead the Politics at one point almost tumbled.

In 2021, the Nigerian Electricity Regulatory Commission (NERC) ordered the market operator Transmission Company of Nigeria (TCN) to suspend authorized direct supply by power generation companies to consumers.

This generated controversy as many misinterpreted the directive to mean that the industry regulator had suspended the Politics.

But NERC, in a quick response, said that the regulations provide conditions for the granting of eligibility status by the Commission, which some clients flouted, hence the directive.

“….the Commission has further issued the guidelines for the filing of competitive transition fees to account for the loss of revenue by DisCos in compliance with section 28 of the Act.

In In this regard, electricity consumers across the country who comply with the provisions of the Eligible Customer regulations may avail themselves of the bilateral contractual opportunities presented by the intent of the provisions in EPSRA and ECR”, the regulator had in a clear statement.

Also, Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors, ANED, Barr. Sunday Oduntan also pointed out that contracts signed and operated by GenCos and consumers did not meet the requirements set by NERC.

Exploit the Eligible Clients Frame

Although since privatization Nigeria has increased its power generation capacity substantially, additional capacity after the privatization exercise has been limited or denied reaching end users.

Limitation of production capacity occurs frequently in the NESI. The independent system operator obliges GenCos to reduce the amount of energy injected into the network to maintain system stability, nominal system voltage, nominal frequency and to avoid the general collapse of the national electricity grid.

However, the GenCos have repeatedly lamented that coercion by the system operator has huge financial implications. They said that in addition to the huge investment to achieve capacity, they also pay for their fuel, otherwise known as natural gas, to run that capacity amidst other operational running costs.

However, with blocked production capacity in the electricity market and the low liquidity of the market, exploiting the dividends of eligible clients is a brilliant way to liberate the electricity sector.

Meanwhile, there are 12 power generation companies in of the country, exclusively owned by the private sector.

They are; Egbin, Azura Power, Sapele Power Plc, Geregu, Transcorp Power, North-South power, Mainstream energy, Pacific Energy, Afam Power, Geometric Power and Ibom Power.

Apart from these GenCos, in In 2004, the National Integrated Power Project (NIPP) was conceived as an accelerated government-funded initiative to stabilize Nigeria’s electricity supply system, while the private sector-led structure of the Power Reform Act Electric Power Sector (EPSRA) of 2005 took effect.

Initially, the NIPP was designed around seven medium-sized gas-fired power plants in gas-producing states and the critical transmission infrastructure needed to evacuate the additional electricity into the national grid.

Accordingly, the Federal Government (FG) incorporated the Niger Delta Power Holding Company Limited (NDPHC) as a limited liability company to serve as the legal vehicle to hold the assets of the NIPP using best business practices focused on the private sector. .

The NDPHC is fully underwritten by federal, state and local governments with a mandate to manage power projects labeled National Integrated Power Projects (NIPP), an emergency response program to address the electricity problem. in the country.

In a total of 10 power plants were built in different parts of the country. These are the Ihovbor power station in Benin, Edo State, with a capacity of 4 x 112.5 MW (ISO 126 MW); Calabar Power Station, Cross River State, 5 x 112.5112.5 MW (ISO 126 MW) capacity; Egbema Power Station, Imo State with a capacity of 3 x 112.5 MW (ISO 126 MW); Gbarain Power Station, Yenagoa, Bayelsa State with a capacity of 2 x 112.5 MW (ISO 126 MW).

The others are Sapele Power Station in Delta State with a capacity of 4 x 112.5 MW (ISO 126 MW); Omoku Power Station, Rivers State, with a capacity of 2 x 112.5 MW (ISO 126 MW); Alaoji Power Station, Abia State, combined cycle power plant with a capacity of 4 x 112.5 MW (ISO 125 MW) and 2x steam 255 MW; Omotosho II Power Station, Ondo State, with a capacity of 4 x 112.5 (ISO 125 MW); Olorunsogo II Power Station, Ogun State, Combined Cycle Power Plant with 4 x 125 MW and 2 x 125 MW steam capacity; Geregu II Power Station, Kogi State, with a capacity of 434 MW.

The 10 NIPPs have the combined capacity to generate over 3,700 MW while its rate (tariff) – price per kilowatt is considered much cheaper even among stakeholders in the energy sector.

In addition, each GenCo has its power generation capacity, which the DisCos are expected to offtake and supply to provide efficient power nationwide.

Interestingly, it is limited by the volume of power it box power grid supply. This implied that he would only be paid for the amount of power supplied.

According to the Managing Director of NDPHC, Mr. Chiedu Ugbo, the company is only allowed to supply 20% of its production, leaving 80% stuck.

His words: “I manage generation assets: I have tariffs 28% lower than those of my peers, which means that I subsidize the sector by 28%.

“Again, I have over 3,500 MW of capacity, but I’m told to only supply 700 MW, and that’s what I get paid on. Now DisCos is handing around 50 percent. That means say that I am paid 50%”.

This calls into question what the company stands for; a social enterprise or business entity.

“We have met with the regulator several times on this to say that the government needs to decide whether we are a social enterprise or a commercial entity because if they increase our tariff, it will lead to an overall increase. in revenues judging by the 4,000 MW capacity we have,” he added.

Meanwhile, NDPHC being an integrated power company with expertise in production, distribution and transmission, state governments could take advantage of the company’s plants strategically located in the regions rather than embarking on the costly and unsustainable supply of diesel-powered IPPs.