The Eligible Customer Regulation was developed by the Nigerian Electricity Regulatory Commission (NERC) to facilitate competition and access to electricity supply for high-end users in Nigeria who are either unserved or underserved. N.B: Electricity tariff in Nigeria has also created some disparities amongst users.
Through the Eligible customer regulations, power Generating companies (Gencos) with uncontracted capacity can access unserved and underserved customers to gain financial liquidity in the industry.
This will serve as a win-win for all parties as the GENCOS will have their uncontracted power wheeled to willing high-end users who will pay higher rates than what the power Distribution Companies (DISCOS) charge for constant and reliable power supply from the GENCOS.
As declared by the minister in line with section 27 of the Act, an Eligible Customer is a customer or a group of end-use customers registered with the commission for that purpose:
• Whose consumption is more than 2MWh/h over the course of 1 month, connected to a metered 11kv or 33kv delivery point on the distribution network.
• That is connected directly to a metered 132kv or 330kv delivery point on the transmission network.
• Whose consumption is 2mwh/h over the course of one month connected to a delivery point on the transmission network and has entered into a bilateral agreement with a licensed distributor for the construction, installation and operation of the distribution system used to connect the customer to the 33kv delivery point.
• Whose consumption is 2mwh/h over the course of one month, connected to a delivery point on the transmission network and has entered into a bilateral agreement with a licensed distributor for the construction, installation and operation of the distribution system used to connect the customer to the delivery point.
The distribution licensee is one who is located at the location where the generation facility and the customer are.
• Site aggregation (a group of end-use customers who combine multiple sites and apply for eligibility status from the commission).
The Eligible customers’ license is granted to the high usage Consumers who apply to the commission to be tagged as eligible customers.
They must be unserved or underserved and their energy needs and consumption must be high-end. For the application for Eligible customer status to be successful the commission must be convinced about the following:
• Metering requirements
1. An end-user requesting eligibility status must procure and install its metering infrastructure
2. All such meters must be capable of remote reading for measurement of active power, reactive power, peak demand and profiling of real load
3. They must not be indebted to the Discos operating in that area.
• Contractual requirements
To apply for Eligible Customer status, the consumers must prove to the commission that they have executed the following contracts:
1. A PPA with the prospective Supplier who will be a Generation Company (GENCO).
2. Execute a Transmission use of systems (TUoS) Agreement with the supplier and transmission Service provider. whichever is applicable, Execution of Distribution Use of System (“DUoS”) agreement with the Supplier and distribution Licensee. (Where applicable).
3. Execute a market participation agreement with the market operator.
4. Execute a bilateral agreement with the distribution licensee for the construction, installation and operation of a distribution system to be used for the supply to the customer. The bilateral agreement may also involve the local DISCO as a SUPPLIER OF LAST RESORT.
5. To execute other agreements as may be prescribed by the commission.
• Financial requirements
Applicants shall post a Letter of Credit or Bank Guarantee in favour of the Market Operator in accordance with the Market Rules to cover Market administration charges, TUoS charges and other charges as may be approved by the Commission.
As a holder of Eligible customer status, the eligible customer has certain rights which may include:
• Network access
• Choice of supplier
• Right to Switch suppliers
• Access to transmission and distribution network among others.
Those rights, however, are not without some obligations attached to them especially when it applies to their relationship with the Supplier or GENCO in this case.
Their obligations to the GENCOS include:
• Comply with the requirements for off-take on contracted quantities at peak capacity at each connection period
• Meet all financial commitments to the supply of electricity in a timely manner.
To offer to sell power to an eligible customer, a supplier must hold a Generation License pursuant to section 64(3) of the Act or a Trading License pursuant to section 68 of the Act.
They must also obtain the Commission’s approval after they file an application to the Commission for eligibility status with all supporting documents which will include all the contractual requirements stated above.
The commission shall consider the application on its own merit, verify and evaluate the application and issue a decision not later than 30 working days from the date of filing of complete documentation.
We will be writing subsequently on electricity tariff in Nigeria. However, We hope that this summary has been helpful in explaining what the Eligible customer status entails in the Nigeria Electricity Supply Industry (NESI).
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About the Writer
Akpan Bright Jacob is a lawyer based in Abuja Nigeria who specialises in Energy Law practice and consultancy. He is the Principal Partner of Lawnergy Consults, a law firm with a specialisation in Energy and Electricity law practice and consultancy.
The firm is located in Abuja. He has an LLM (Hons) in Energy law from the University of Ibadan, he also schooled in the University of Abuja, Abuja and the Nigerian Law School, Kano Campus.
You can reach out to Bright if you need more information on electricity tariffs in Nigeria via his email firstname.lastname@example.org
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