Letter to Citizen Buba: Dousing Reaction to Electricity Pricing (2)

electricity pricing

Buba, it is essential for you to recognise that the MYTO, on introduction, came along with government’s subsidy on rates for the lowest segment (socio-economically) of consumers, the Residents 1 (R1) category. As “subsidy no go last forever”, this will be removed by mid 2014, having given sufficient room for people’s adjustment to what private sector driven electricity market brings.

The Nigerian Electricity Regulatory Commission or NERC is straddled with the responsibility of determining what is payable as bill by electricity customers, not these privately operated electric power distribution companies or Distribution Network Operators (DNOs). Tariffs from the MYTO are not the same for all DNOs.

Citizen Buba, expect an upward (though marginal) movement of electricity rates as time goes on. It is quite explicit in NERC’s tariffs, published in June 2012, that both the energy charge and the accompanying fixed monthly service charge, for the various categories of customers, are slightly increased annually. Under Nigeria’s tariff system, electricity prices are reviewed every five years, in order to make for adjustments and ensure cost recovery for the investors. I am quite watchful of not competing with a broken record (not being repetitive) over pointing out some grounds for rates increases (even if marginal) being fallout of the power sector privatisation, since I have already reasoned along this line.

I do not see rates for electricity rising to incur public protest, going by NERC’s vice-like grip on pricing, and the government’s consciousness of any unfavourable ripple effects, even where the disruptive state of the following persist:

Gas supply (shortfall in the supply of gas to generation plants makes for epileptic power regime); poor load allocation to DNOs (this is based on a percentage of total energy generation in the country. As I write this, the distribution companies are even receiving less of the assigned percentage); purchase of bulk electricity (some DNOs regular ‘wobbly’ capacity to purchase bulk electricity from the electricity market, to sell at retail rates to end users); also some DNOs now showing early signs of ‘financial fatigue’, hence expressing serious post-privatisation ‘financial strains’ – A reflection of inability to cope with operating costs, injection of funds for infrastructural maintenance and expansion.

I urge you not to overlook what Nigeria is confronted with presentlyInstalled generating capacity that hovers around 9000mw; available useful capacity not exceeding 5,000mw; and the country’s demand presently being estimated at about 16,000mw. This situation is far from what we should thumb our chests about. Nevertheless, getting to where we all desire is not an over-night thing, but involves lots of process-based activities that will surely yield positive results later.

Buba, skepticism about pricing should not put you off completely, or you will miss out on what unfolding activities in the sector yield in due course. My next, and third, title in this series on electric power distribution marketing in Nigeria, “Gold in the power sector” helps remove some scales off your eyes.

I nurse the feeling that Buba still awaits (after ‘all this long grammar’) what should be done to douse the impact of increased electricity pricing on ratepayers.

Has it occurred to you that the typical Nigerian consumes electricity, when available, not being mindful that a lot is saved through reduction in the consumption? I suspect it is a common scene in your environment to have some electric lights (so-called security lights on buildings) being perpetually on, even at mid-day. The same holds true for other forms of reckless consumption of power. Those who indulge in such are often those who scream loudest when electricity bills ‘refuse’ to remain at the level they desire. These comprise the category of consumers who should be educated on steps were actions such as turning off appliances, lights, or the television when these are not being used; changing to using compact florescent light bulbs; not washing clothing in the evening, thiab lwm yam.

Soon after the present public clamour for meters have been catered for by the DNOs, I urge them to ‘hit the road’ on Demand-Side-Management (DSM) programme – DNOs must not toy with this or will regret it. As hinted in an earlier title, DSM is the education of consumers by the utilities on how to manage their electricity demand and load. In summary, DSM provides tips and insight to customers on how to cut on consumption (to save cost on energy, and ultimately save money).

I have an enlightenment package (including even a public campaign strategy) on this, which clarifies how energy saving appliances and incentives to consumers (e.g. peak pricing) can stimulate interest among Nigerians on how to save power. Buba, there is no magic about it. Cutting of the consumption of ‘not needed electricity’ is your best bet in dousing the impact of increased electricity pricing.

As people do not change as fast as their environment, there is no gain saying that with intensive consumer education, Nigerians will certainly change along what the new order portends. Let us think positively, and refrain from being unduly criticalAlways smelling a rat while cockroaches can be seen crawling all over the place.

While I opt to remain a useful solutions provider in my calling as a consultant in marketing, I wish you and your family well, and advise that you should always remain a good citizen of this great country.

Yours sincerely,
Anie Anokuru

1 Comment on "Letter to Citizen Buba: Dousing Reaction to Electricity Pricing (2)"

  1. Iteire Apollos | April 2, 2014 at 12:58 pm | Reply

    I think the problem is not the price going on. The issue is to see constant light and later we can talk about the prize. If power cost should increase when the supply is not constant, then it doesn’t make any sense at all.

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