Increase in Electricity Tariff Will Increase Burden on Unmetered Consumers – FCCPC Boss
Babatunde Irukera, CEO, FCCPC on Tuesday said it is inappropriate for electricity distribution companies (DisCos) to focus on tariff increase as the only way to increase efficiency, while refusing to address the fundamental issues of metering and arbitrary billing.
He spoke at the Eko DisCo Public Hearing on Tariff Review held in Lekki, Lagos.
See excerpt of his speech below:
“There are three main reasons that the DisCos, including Eko, and particularly Eko, have repeatedly articulated for some of the problems in the industry.
“One, low tariff. Two, energy theft. Three, metering. And it seems to me that the very broad presentation that we have had today addresses only one, which is, low tariff.
“If you are going to promote efficiency, the only way to promote it certainly cannot be increasing tariffs… there is absolutely no question about the fact that increasing tariffs will not in itself necessarily promote efficiencies.
“And so the DisCos, including Eko, the starting point is you must invest. I am not even talking about investment in supply or distribution, you must invest in your collection.
“So long as you have fewer people paying for what most use, you will not find a cost reflective tariff. The answer cannot be burdening those few (who pay their bills) with more.
“It is the business man’s responsibility to find a way to ensure that they are paid for the services they provide. It is not other consumers responsibilities. And it is not even the government’s responsibility.
“And so in all of this presentation that doesn’t address such a low hanging fruit, as improving collections, instead increasing the burden on those who are paying, obviously leaves significant questions to answer from the consumer side.
“What about metering? There is still vast majority of bills that are paid today by estimation. 55 percent of consumers are still unmetered.
In 2015, the distribution companies came to an understanding with BPE that they would meter more aggressively… they said over the next three years they would provide meters to approximately 4.5 million people.
“And that gave us an annual target of about 1.6 million meters. As at 2017, only 250,000 meters had been installed. In 2018, 29,850… We are not bridging that metering gap.
“How can you even find a cost reflective tariff when more than half of your collection is based on estimation or assumption?
“Everytime there is a revenue shortfall, those who are not metered would pay for it. And that is why estimated billing has now become another word for arbitrary billing. Because you are working your way back from the answer.
“You have a target. There are some people who are metered, who you cannot discuss that target with because there are metered.
“And those who are in your estimated billing programme, those are the people you can manipulate their bills, those are the people you can negotiate a bill with. And so they take a brunt of it.
“And that would not be such a big problem if they were just 7 or 8 percent of your collectible. But they are more than half. 55 percent of your collectible are estimated, and you are under pressure to collect. You are under pressure to remit.
“And so even with the best of intention,… we know who the victims would be. And that’s who the victims are. And it seems that you have decided that increasing tariff is the only way to go.
“On that score of efficiency or all of the issues, in articulating this application or justification for revision of the tariff, Eko (DisCo), in this presentation hasnt done enough.
“You have only addressed the tariff increase and it seems like you have decided that increasing tariff is the only way to go. And whatever the math that was presented by the gentleman, very eloquently presented, is flawed math.
“That math is flawed. There is no way that that math could be empirical or sufficiently evidentiary because, like I said, it is based on estimation.
“It is already one-sided. You have looked at (tariff increase as) the only way to cover the deficiencies and to promote efficiency, when you yourself identify more than just the cost as the problem.
“And more so, you have failed in the mutual responsibility that you signed off on to more aggressively meter and provide meters. Not failed marginally, failed woefully.
“And so until we address that, what we would be doing is increasing the burden on those who are already victimised. Why would we victimise the victims.
“Any increase in tariff just means that arbitrary billings would go up. Even if you are not billing them for more energy, you are billing them more for the same energy they are getting or not getting, as the case may be.
“..you say we are in business to make profit, we are consumers also. And the whole business case, the whole model for consumerism is value for money.
“And so you want to be profitable, consumers are not Santa Claus either. They want to pay for only what they are getting. People can’t get two hours of electricity and pay for 10.
“And you might say that that is not the case but there is no way to know. There is no need to argue that. We take a position, you take a different position. There is a resolution. Give me a meter.
“The key things that are usually the reason for a tariff review are still missing
“But in closing, I want to make it abundantly clear, and I believe I speak for consumers across the country. The issue and the question for consumers is not what is an appropriate or fair price. It is one that that fair price is truly fair and transparent, all things considered.
“And secondly, that you, NERC, institutes the framework to ensure that they (consumers) are protected and that fairness is truly seen to be done every step of the way.
