Home Business Nigeria: NERC Outlines Sanctions for DISCOs, TCN Over Load Rejection, Wheeling Deficit

Nigeria: NERC Outlines Sanctions for DISCOs, TCN Over Load Rejection, Wheeling Deficit

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The Nigerian Electricity Regulatory Commission (NERC) has signed a new set of guidelines that would see power Distribution Companies (Discos) get sanctioned for load rejection and the Transmission Company of Nigerian (TCN) punished for inability to wheel electricity sent to it by the Generation Companies (Gencos).

The regulatory instrument titled: “Guidelines for Economic Merit Order Dispatch of Generation Capacity and Related Matters,” seen by THISDAY, it was learnt, seeks to settle the existing imbalance between the Discos and the TCN.

The document was jointly signed by the new Chairman of NERC, Mr. Sanusi Garba and Commissioner for Legal, Licencing and Compliance, Dafe Akpeneye and was dated February 15, 2021.

While setting the context for the new guidelines, NERC recalled that section 12 of the 2019 Multi Year Tariff Order, (MYTO) minor review concluded that where it was established that TCN was unable to deliver a Disco load allocation, the TCN shall be liable to pay for the associated capacity charge.

Furthermore, NERC noted that where a Disco fails to take its entire load allocation due to constraints in its network, the Disco shall be liable to pay the capacity charge as allocated in its vesting contract.

On the objectives of the guidelines, NERC maintained that it was to implement a methodology to determine and hold TCN financially responsible for unfavourable deviations from the prescribed economic merit order dispatch of generation plants.

It affirmed that it would further determine and hold a Disco financially responsible for failing to be available to distribute its contracted load allocation due to constraints in its network.

According to the regulator , the guidelines would further hold the TCN accountable for failure to deliver to a Disco’s nominated trading points the its contracted load allocation due to constraints in its (TCN’s) network and hold Discos accountable for failure to off-take its available contracted load allocation at its nomination points.

On the steps in the determination of deviations from the order, NERC stated that the Nigerian Bulk Electricity Trader (NBET) shall invoice for capacity charge and energy to Discos based on the monthly settlement statement issued by the market operator.

It explained that the market operator shall rely on data provided by the system operator regarding capacities made available and energy dispatched every hour from each generating plant in producing the monthly settlement statement.

“The market operator shall surcharge TCN the excessive component of the wholesale energy cost when issuing invoices to Discos in the next billing cycle,” it stated.

On the methodology adopted for accounting for TCN’s failure to deliver available generation to Discos and the power distributors’ failure to off-take contracted load allocation, NERC stated that NBET shall invoice for capacity charge and energy to Discos based on their load allocation and metered energy respectively.

It noted that where a Disco’s average energy off-take at the end of a monthly market settlement period is lower than its load allocation based on the guidelines, the Disco shall be liable to pay capacity charges in line with its load allocation and energy charge based on metered energy intake in the month.

“Where it is established that a Disco’s average energy off-take from the transmission is lower than its load allocation based on 6.0(c) above, the Disco shall be liable to pay TCN liquidated damages (LD) based on the approved tariff (N/kWh) of TCN.

“Where a Disco’s average energy off-take over a period of one month has exceeded its load allocation as in 6.0(c) above, the Disco shall only be liable to pay capacity charges based on its load allocation and energy cost based on metered energy off-take in the month,” NERC added.