NERC Deregulates the Pricing of Meters under the Meter Asset Provider Scheme
Introduction
On Monday, 29th April 2024, the Nigerian Electricity Regulatory Commission (“the Commission” or “NERC”) deregulated the pricing of meters deployed under the Meter Asset Provider (MAP) Scheme. This was released vide Order No: NERC/2024/040; Order on the Deregulation of Meter Prices for Meters Deployed under the Meter Asset Provider Scheme (“Order”) with an effective date of 1st May 2024.
This Order abolishes the price regulation regime as contained under Regulations 8(1)(c), 16(1)(h), 31, and 32(1)(b) of the Meter Asset Provider and National Mass Metering Regulations (“MAP Regulations”). Prior to this Order, the Commission had in September 2023 approved an upward review of single and three phase meters from their initial bundled costs of N58,661.69 and N109,684.36 to N81,795.16 and N143,836.10 respectively. This pricing included the cost of the meters, meter accessories and all other associated costs of installation and warranties, as determined by an open competitive procurement process conducted under the National Mass Metering Programme (NMMP).
However, the Commission has taken a U-turn to approve the deregulation of prices of meters deployed under the MAP scheme with effect from 1st May 2024, and derogates from the provisions of sections 8(1)(c), 16(1)(h), 31, and 32(1)(b) of the MAP Regulations.
What does this mean for Electricity Consumers and Meter End-Users?
This deregulation establishes a new deregulated pricing regime comprised of a competitive bidding process driven by market realities. It also lifts existing restrictions thereby allowing all MAP permit holders to provide their services across all electricity distribution companies (“DisCos”) in Nigeria, provided they meet quality specifications as prescribed by NERC in the Metering Code. In line with this development, DisCos must provide publicly accessible online portal(s) displaying their specific technical requirements and commercial terms to encourage MAPs permit holders to participate. End-use customers will then be provided with a choice of authorised vendors. To enhance easy acquisition of meters, the Order mandates DisCos to provide a dedicated bank account for payments made by customers for meters.
This deregulation also encourages the supply and use of various types of meters, including smart meters, Internet of Things (IoT) meters, DIN rail meters, basic electronic meters, and current limiters depending on the consumer’s energy consumption and provided that the meters meet the specific and technical specifications as provided by the Commission.
Outlook
This pricing deregulation comes in the wake of several requests submitted by Meter Asset Providers (“MAPs”) to NERC for an upward review of the extant prices of meters in light of the significant changes in the Naira-Dollar foreign exchange rate. Since the last price review in September 2023, MAPs have complained that the country’s macroeconomic variables have constrained their ability to supply meters. The deregulation therefore seeks to close the metering gap in a bid to eradicate estimated billing practices which has been one of the biggest problems in the Nigerian Electricity Supply Industry (“NESI”).
MAPs are required to install a meter at the premises of the end-use customer within 10 working days after payment by the customer, failing which such MAP shall be disqualified from uploading meter prices in the next price determination window. To ensure transparency, all DisCos are mandated to file a monthly return with the Commission showing the meter supply and installation performance of each MAP.
This pricing deregulation is expected to be followed by an increase in the prices of meters but will lead to more Metering Service Agreements (“MSAs”) between DisCos and MAPs due to the pricing liberalization. With more MSAs comes more supply and installation of meters to end-use customers, invariably closing the metering gap and ending the estimated billing regime in the NESI.
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