The Nigerian Electricity Regulatory Commission (NERC) says fixed charges collected by Electricity Distribution Companies are legal as it is contained in Electricity Power Sector Reform Act of 2005 (EPSR).
The Chairman of NERC, Dr Sam Amadi, said this on Monday in Abuja while reacting to the resolution of the National Assembly (NASS) that NERC should rescind the charges.
"Fixed charge that consumers pay is not illegal or necessarily fraudulent. Fixed charges appear in different names in electricity markets across the world.
'The difference In Nigeria, is that we do not have a good supply of electricity because of lack of adequate generation capacity.
"The purpose of fixed charge is to recover capital and fixed costs of the various operators in the industry.
"Section 32 of EPSR Act mandated the commission to approve a tariff that allowed investors to recover their cost with reasonable return on assets invested in the business,’’ he said.
Amadi explained that investors in the sector invested in assets on regular basis and would recover their investments through fixed charges paid by consumers.
NERC said that once a consumer was connected to the network, the incestors are by law expected to recover the cost of that investment whether energy was supplied or not.
Amadi noted that abolishing fixed charge might impact negatively on generation operators who invested heavily and continuously to provide more stable power.
He said that Nigeria’s type of fixed charge was different because customers were charged whether they had electricity for many months or not.
"NERC had held several public consultations to ascertain the best measure to generate financial viability that will not expose consumers to pay for electricity they did not consume.
"If the fixed charge should be repealed, it should follow the due process of law which only NASS has the right to do.
"The re-modelling of the fixed charge is part of the ongoing tariff review process being conducted by the distribution companies and NERC,’’ he explained.
On bulk metering of customers and where many customers were metered jointly, he said that the commission agreed with the National Assembly (NASS) that customers should be metered individually to avoid over billing.
Amadi said that to ensure that the rights of customers were not trampled upon, NERC and all the stakeholders embarked on massive sensitisation of customers on their rights and privileges.