Power: Consumers Welcome Special Compensation Approved For Band A Customers

Consumers welcomed the Nigerian Electricity Regulatory Commission’s (NERC) order for distribution companies to pay special compensation to Band A customers affected by widespread generation shortfalls, describing the regulator’s decision as a long-overdue recognition of their losses.

The NERC, on Thursday, ordered distribution companies to pay special compensation to Band A customers affected by widespread generation shortfalls between February and March 2026 — a move welcomed by consumer groups but described as only a partial response to deeper sector problems.

In Directive No. NERC/2026/002, published on the commission’s website in Abuja, NERC said the compensation recognises “significant generation shortfalls” across the Nigerian Electricity Supply Industry (NESI) during the two-month period.

The commission blamed the shortfalls largely on inadequate gas supply and vandalism of critical gas and transmission infrastructure — constraints it said were beyond the direct operational control of Distribution Companies (DisCos).

Consumers welcomed NERC’s decision, calling it a long-overdue recognition of their losses.

While the refund has been praised as a necessary immediate relief, the consumers, however, urged for a swift, coordinated action to address the underlying causes — recurrent gas supply disruptions, widespread vandalism of transmission and distribution assets, and chronic infrastructure decay — warning that refunds alone will not end the cycle of outages that have battered households and businesses nationwide.

Under the directive, Band A feeders that recorded an average daily supply of between 18 and 20 hours during the covered period will be handled under the existing compensation framework (addendum No. NERC/2024/003). Feeders that fell below 18 hours of daily supply are eligible for a special compensation arrangement.

NERC said affected feeders will not be downgraded during the coverage period.

The compensation formula specifies that Non-Maximum Demand (Non-MD) customers on eligible feeders will receive credits equivalent to 20 per cent of the approved February energy cap for the feeder, while Maximum Demand (MD) customers will receive 20 per cent of the average energy billed per MD customer in February.

Prepaid customers will receive token credits, and postpaid customers will have bill adjustments.

DisCos were given deadlines to complete payments: compensation for February by May 31 and for March by June 30. NERC also barred DisCos from offsetting compensation credits against any existing customer debt and instructed that customers be clearly informed of the value and period of any compensation received.

Commenting on the development, the national president of the Association of Small Business Owners of Nigeria (ASBON), Dr Femi Egbesola, while expressing support for the NERC order mandating a 20 per cent refund for affected Band A customers, described it as a constructive move toward strengthening consumer protection and accountability within the electricity supply industry.

He, however, cautioned that while the measure is welcome, it must not distract from the deeper structural issues undermining Nigeria’s power sector performance.

According to him, persistent challenges such as gas supply constraints, infrastructure vandalism, and inefficiencies across generation and transmission remain central to the country’s electricity crisis and must be addressed holistically.

“While this compensation is a welcome gesture, it’s important not to overlook the underlying structural challenges that contribute to power shortages. Issues such as gas supply constraints, infrastructure vandalism, and ongoing deficiencies in generation and transmission need to be addressed as part of a comprehensive strategy.

“Sustainable solutions should prioritise improving reliability and expanding capacity rather than depending on compensation as a recurring solution. Consumers are ultimately seeking a consistent, affordable, and high-quality electricity supply.”

Egbesola further stressed the need for coordinated action among key industry players, noting that lasting improvement in service delivery would depend on effective collaboration between regulators, power generation companies, distribution companies, gas suppliers, and other stakeholders.

“NERC’s action is a promising regulatory move, and it is essential that this is backed by stronger measures to ensure that DisCos, GenCos, gas suppliers, and other stakeholders work together to fulfil the commitment of delivering improved power services to Nigerians.”

Also speaking, the national chairman of the New Dimension Shareholders Association, Patrick Ajudua, said the directive represents a potentially significant step toward strengthening consumer rights and addressing long-standing grievances over poor service delivery by Distribution Companies (DisCos).

He noted that introducing a 20 per cent compensation for shortfalls recorded between February and March 2026 could set an important precedent for accountability in the sector.

“Historically, customers in Band A have faced high rates despite receiving less than 20 hours of power daily, with limited options for recourse. The introduction of a 20 per cent compensation for shortfalls occurring between February and March 2026 establishes a precedent for accountability in the sector.”

Ajudua, however, emphasised that the policy’s effectiveness will ultimately depend on strict, transparent enforcement by regulators, warning that implementation remains the real test of the reform.

NERC said it will continue to monitor implementation and verify DisCo compliance to ensure eligible customers receive due compensation while balancing its mandate to protect consumers and preserve market stability.

The directive represents a regulatory attempt to hold market players to account for service shortfalls; stakeholders say its long-term impact will depend on parallel measures to secure gas supply, protect infrastructure and strengthen generation and transmission capacity.