Eligible customer regulation, NDPHC and the quest for improved power

The introduction of eligible customer regulation by the federal government in 2017 is yet to be fully keyed into despite its many benefits. TOPE SUNDAY reports.

In 2017, the federal government through the Nigerian Electricity Regulatory Commission (NERC), introduced the eligible customer regulation to allow electricity generation companies (GenCos) and Independent Power Producers (IPPs) to by-pass the Bulk Trader (the Nigerian Bulk Electricity Trading Plc (NBET)) and distribution companies (DisCos) in order to sell electricity directly to “Eligible Customers” as defined by the regulation.

In Nigeria today, the installed generation capacity stands at 13,000MW, while the wheeling capacity of the Transmission Company of Nigeria (TCN) is about 8,100MW. But usually, according to available statistics, its reportedly wheels 4,000MW consistently for a week usually results in grid collapse. Also, some DisCos are said to be in the habit of rejecting power for various reasons.

The reason for eligible customers

To address this ugly situation, the Federal Government through NERC in 2017 introduced eligible customers in the Nigerian Electricity Supply Industry (NESI) to permit electricity generation companies (GenCos) and Independent Power Producers (IPPs) to by-pass the Bulk Trader (the Nigerian Bulk Electricity Trading Plc (NBET)) and distribution companies (DisCos) in order to sell electricity directly to “Eligible Customers” as defined by the regulation.

Before its introduction, customers were only permitted to purchase electricity from licensed distribution companies (DisCos) except for industrial, commercial, and residential customers (off-grid IPPs or captive generators) who generate their own power.

Following a nationwide stakeholder consultation held by the Nigerian Electricity Regulatory Commission (NERC), the Eligible Customer Regulation was issued on the 6th of November, 2017. Key private sector beneficiaries include: High electricity consumers such as manufacturing, industrial, and commercial facilities; ; I n d e p e n d e n t P o w e r Producers and Investors; Electricity Generation companies; Electricity Distribution companies.

Its importance

According to reports, the objective of the regulation is to provide standard rules to achieve the following; facilitate competition in the supply of electricity; promote the rapid expansion of generation capacity, as well as the opportunity for improvement in the quality of supply; Encourage third party access to transmission and distribution infrastructure as a precursor to full retail competition in the Nigerian electricity market; Also, it allows licensed generation companies with un-contracted capacity to access un-served and underserved customers thus improving the financial liquidity of the electricity industry; Enhance the stability and operational efficiency of generation companies arising from the flatter load profiles of Eligible Customers and possibly lower technical losses, depending on the required network interconnection. “It covers end user or group of end-users registered with NERC whose consumption is no less than 2MWhr/h connected to a metered 11kV or 33kV delivery point on the distribution network and subject to a distribution use of system agreement for the delivery of electrical energy. Also,  End users or group of end-users connected to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy are captured. “End user or group of end users with consumption in excess of 2MWhr/h on monthly basis, and connected directly to a metered 33kV 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 33kV delivery point. End user or group of end users, whose minimum consumption is more than 2MWhr/h over a period of one month and directly connected to the metering facility of a generation company, and who 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 report said..  NDPHC’s intervention However, the Nigeria Delta Power,  as a limited liability company to serve as the legal vehicle to hold the NIPP assets using private sector-orientated best business practices Holding Company, according to a report obtained from the company has latched on to Eligible Customer in its determination to ensure that productive sectors of the economy have access to needed electricity to provide jobs; ensure continuity of economic activities; avenue for selling stranded electricity; ensure profitability of its operations since the system is yet to decide if NDPHC is commercial or social service company; its electricity is not usually given priority despite its low price.

The company, which has available capacity of 3,000MW as an integrated power company, it has expertise in generation, distribution, and transmission; and had already signed important PPA with heavy users of electricity across the country. A source in the company said NDPHC can source gas supply as needed.

The way forward

Stakeholders in the power industry said

industries, industrial zones, state governments and big institutions will eliminate unnecessarily spending scarce resources on building IPPs, adding that power already available but stranded.

They argued that interested parties could connect directly, and it is expected to take shorter time to supply electricity than new plants.

The appeal

To hasten the process, an insider in the electricity industry, told our Reporter that NERC should strive to hasten its approval process in the Eligible Customer scheme, and called on the state governments to take the advantage of NDPHC plants located strategically across the regions rather than embark upon expensive and unsustainable provision of diesel powered IPPs.

He also asked the state government to deploy scarce resources to other productive areas.