By Sopuruchi Onwuka
The huge debt burden on the electricity distribution companies in the country will inevitably crumble the nation’s electric power sector unless the operators address the billing disputes associated with outrageous electricity bills whimsically slammed on unmetered customers in their networks.
Investigations by The Oracle Today revealed that despite regulatory demand that all electricity consumers must be accurately metered for billing purposes, most residential, commercial and industrial customers still haggle out their bills with the distribution companies.
Bill escalation, it was gathered, is prevalent in customer classes that are billed by estimation. The residential customers with low tariff entitlements, our investigation showed, appear to be deliberately denied meters even though the distribution companies point at endless metering rollout plans with which they beat back regulatory penalties for never meeting deadlines on complete metering coverage.
An independent marketing consultant to some of the distribution companies who tried to explain the situation said the distribution companies deliberately stall meter coverage to low tariff settlements in pretence to use estimation to reap high revenue from poor services.
“There are customer classes that Discos won’t want to hear they are not metered; but there some customer classes that they don’t care whether they have meters or not. If you install meters in a place where supplies are just an hour in few days, is it not the amount of energy that the customer consumes that he will pay for?”
Our source who is close to the developments in the downstream power sector pointed out that the distribution companies have sustained the excuse of prolonged metering programmes to delay meter deployment in communities where their revenue would flatten out if customers paid for exactly the right tariff for the electricity consumed.
However, wide metering gaps in the market have created room that firmly establish estimation as the main billing process among all the distribution companies, and the situation is worsened by inefficient accounting, payment processing lapses and sharp practices in the system.
It was also observed that errors in payment accounting processes also translate to faulty bills that stoke conflicts between the distribution companies and their customers.
Over checks showed that over 60 percent of all customer complaints is related to disputes associated with high bills and poor services. The customers mainly complain of outrageous bills popularly termed crazy bills, discrepancies in their statements of account and scanty supplies.
Our survey of customers connected to networks operated by Ikeja Electrics which is affiliated to Sahara Group, and Eko Distribution Company, all in Lagos State, indicate that most of the residential customers who are evidently greater in number are not metered. Worse hit are residential customers in urban slums, suburban towns and satellite villages who consequently fall vulnerable to billing exploitation.
Residential customers in high brow estates that host powerful personalities in the society are better serviced with both prepayment meters and electricity supply hours. In the estates like the Ikeja GRA, Abiola GRA, Ogudu GRA and similar high profile estates covered by the Ikeja Electric; and the elite estates in Ikoyi, Lekki, and Ajah covered by Eko Disco, billing disputes are rare as nearly all houses are metered.
Conversely, residents in Ikotun, Oshodi, Igando, Egbeda, Ipaja, Shomolu, Ikorodu and Epe all under the Ikeja Disco; and similar settlements like Idi Araba, Yaba, Ajegunle, Apapa, Amuwon Odofin, Okokomaiko, and Badagry, all under the network of Eko Disco are at war with the service providers over ‘crazy’ estimated bills as most of the homes in these locations are not metered.
From 30 samples of bills and payment receipts examined during the survey, it was observed that homes in unmetered residential clusters get high monthly bills while customers in metered residential enclaves literally buy as much consumption units as they want with the facility of prepayment meters.
Sources at some field payment centers in Ikeja stated that prepayment customers paid as low as N10,000 per month, whereas some slum dwellers with less loads in the same networks receive bills in excess of N50, 000 in one month! The outrageous bills which are vehemently disputed are all estimated.
Customer care officials at Ikeja Electric argue that some of the high bills are accumulated. There are however some others that are attributed to computing errors, “system errors,” and disputed load assessments. There are also cases where bills from one customer are addressed to another!
Our checks also showed that the distribution companies derive their estimates primarily from arbitrary spread of supply accounting deficits on average household in a particular area supplied from a controlling feeder.
Chief Operating Office at Eko Electricity Distribution Company, Comrade Sam Nwaire, explained, “As I told you what each area gets most of the time is purely a determinant of input energy that is received at the point of entry in the network or in the distribution transformer less metered bills. Then the remainder is averagely shared. That is system driven; it is not allocated on individual consideration like saying give this one N200 and give that one N400.”
“For the billing we do according to estimates, we bill according to NERC’s estimation methodology. For us, we have all our transformers metered, we have all our feeders metered. So, the only place we have gaps now is on the customers.
“What this tells you is that if I have a customer population of say 300, and I have 100 of them metered, then if I have 3000 hours of power given to those under that DT (distribution transformer), and 1000 hours is consumed by those who are metered, then automatically the remaining 2000 is what we share based on tariff structure to those who are not metered.
“Yes, I agree that we may not be fair to all concerned but that also makes it impossible for some customers to be treated preferentially. I must say that there might be some little overbilling and underbilling but, take it or leave it, we are guided by that customer mix that have already been taken care of, enumerated, and, based on the load inventory that is already in the enumeration schedule. That is what is used in making sure that everybody is appropriately billed.
Spokesman of the Association of Nigeria Electricity Distributors (ANED), Chief Sunday Odutan, agrees that spreading of bills for unaccounted consumption on unmetered customers is prevalent in the market. He also pointed out that most unmetered customers are reluctant to pay the estimated bills. He said their refusal to pay worsens the rapidly growing market revenue shortfalls.
Spokesman of Ikeja Disco, Mr. Felix Ofulue, declined comments o the billing disputes between unmetered customers and his company; but an official of the company who volunteered an explanation said the company runs tough times with unstructured residential customers, explaining that most of them decline to pay their bills.
He admitted that the disputed bills are estimated, explaining that plans were ongoing by Ikeja Disco for a phased meter deployment programme that would see all customers in the network metered over a time frame.
Managing Director of Green Energy Limited, Engr. Chris Okaa, explained that most customers refuse to pay estimated bills based on the understanding that “the estimated bills have no bearing on reality.”
He pointed out that unmetered customers known to the billing system are made to pay far much more than is justifiable in other to cover for the consumers Discos fail to capture in their billing system. “So, the customers protest by refusing to pay, morally they justify their refusal to pay. The estimated bills have no bearing on reality.”
And all industry players that spoke on the issue agree that disputes arising from billing disagreements form the basis for collection shortfalls that translate to huge debts along the investment loop in the sector.
According to Chief Sunday Odutan, the market revenue shortfall as at August stands at princely N892 billion. And the former Group Executive Director in charge of Gas and Power at the Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, put total debts to distribution companies, the transmission company, generation companies and gas companies at over a trillion Naira.
Our investigations showed that the critical factor for debt accumulation in the sector is hosted in the failure of the distribution companies to meet their customers’ demand for service reflective bills, a simple process that calls for deployment of prepayment meters.
Industry experts insist that billing by estimation, even when following established methodologies established by the National Electricity Regulatory Commission (NERC), is flawed at different points.
Engr. Chris Okaa, told our reporter that electricity bill estimation cannot be justified under any consideration, pointing out that the basis for estimating individual customer’s bill does not exist as his consumption cannot be captured within a stable context.
Engr. Okaa who functioned as CEO of several Distribution Zones of the defunct Power Holding Company of Nigeria (PHCN) Plc explained that templates do not exist for estimating a consumer’s rate of electricity consumption, duration and frequency of power supply, quality of supply, average load range, and actual consumption within the billing period.
According to him, “there is low supply availability; predictability of supply is also low; the industry has no reliability, and the quality of supply is poor.”
He made it clear that most of the features and conditions that form calculable factors must be constant and predictable for estimates to generate figures that could be approximated into an acceptable bill.
Engr. Okaa argues that unhappy customers naturally would not want to pay an operator he considers unfriendly, dishonest and inefficient. He explained that most cases of deliberate refusal to pay are mere expression of protest against unsatisfactory services.
“Payment is not priority to unsatisfied customer because he is not happy,” he stated, adding that loss of customers’ trust in their service provider has led most of them to resort to self help and fall vulnerable to sharp practices in the system.
He said the worsening collection losses in the electricity market stem from failure of the Discos to rein in vast number of free consumers into their billing system, warning that transferring payment liability of free energy consumers on customers in the billing data would continue to meet resistance from defiant customers that patronize illegal connections and reconnections.
“Collusion is high in the evasion of payment and physical interface makes sharp practices very possible. Unmetered customer has no impulse to pay because there is no correlation between consumption and bills,” he pointed out.
There is no argument on the urgent need for market operators to close the yawning metering gaps to restore credibility to the billing system and legitimately hold consumers liable for payment.
Comrade Nwaire said Eko Disco is already working on that. He stated that his company was running a phased meter deployment programme that would see communities flooded with prepayment meters in a scheduled process. He explained that it would be haphazard and operationally tasking for the company to attend to metering requests from customers from different areas of the network simultaneously.
According to him, closing the metering gap would require time, funds and strategy in order to make sure that no segment of customers in the network is left unmetered.
“We have a metering plan. You cannot be running from pillar to post like what was happening in past. What we do now is metering rollout. That means that you go to an area, pick up a transformer and you meter it end to end. If we keep issuing meters without such a plan, this estimated billing will be there for life. So what we are doing now is taking it DT by DT.
“What happens today is that we might have a rage from DT1 to DT9000. As I speak to you now we have done 1800. The customers under the remaining 7200 will not agree that metering is going on because they have not seen it. So if somebody from the areas covered by the 7200 transformers comes to our Disco they may tell him there is no meter. But I assure we have meters but we are deploying according to plan. That is different from what we used to have before when somebody would collect money from you today and delivers a brand new meter tomorrow.
“From the kind of complaint surge I get in the office, there is the tendency that some unscrupulous elements might be extorting money from people with the promise of getting them meters even when they know they have no access to it.
“Today it doesn’t work that way. What obtains today is that if it is the turn of your transformer, whether you are in Jalingo or in Abuja we call you that we are in front of your door to deploy a meter for you.”
On payment accounting mishaps in some of the bills under dispute, Comrade Nwaire stated that it is not a general problem in the market, saying most Discos have already upgraded their payment and accounting systems to electronic platforms.
“The credit update errors are inherited from PHCN. In those days things were analogue. Some Discos still have not upgraded anyway; and that could lead to building of old bills into new ones. In our own network, we have installed an automated system that credits a customer immediately he pays any money into our platform. Today we have gone electronic!
“The only way out of such problem is for such people to report to the service provider who should investigate it and ensure correction. For you, even as the customer, you have right to protest your bills in writing to the Customer Service Unit of the Disco. And by law they are supposed to respond to you in 15 day to fix a date for load inventory in your house.
They would now make recommendation to the billing department which is outside their control. Based on that, your bill is adjusted and recorded in the system which would now bill according to the verified load inventory.
The independent consultant who spoke to our man said estimated billing issue is difficult to address in the short term given the huge metering gap in networks. “But that does not mean that all hopes are lost.”
However, the distribution companies all point at the weight of investments required to cover their market concession areas with prepayment meters, arguing that time is required to muster adequate funds for metering programmes as required by regulation. The cyclical argument has lingered for years as billing disputes take huge tolls on revenue collection.
However, while strong narratives flow around billing disputes and metering gaps, some bad elements on the field operations staff of the distribution companies, including marketers and linesmen that go on revenue drive, engage in sharp practices that encourage fraudulent or unsatisfied customers to evade payment. And with their backstage operations, the complex billing and collection problems get complicated!
Chief Odutan told The Oracle Today that the problem of complicity of Disco staff members in aiding payment evasion through illegal connections and reconnections has become heavy in the hands of the distribution companies. He added that ANED was collaborating with the Discos the weed out the bad elements from the system.
“Yes, they connive but as soon as we know who such staff members are dismiss them. We have done that in some locations. When we sack them then others will now know that they cannot continue to do things like that.
“We have done that in Ibadan, we did it in Benin and Ikeja. Something is going on now in Eko. We have also done it in Abuja and some many locations, even in Kano Disco. But, you see, the level of infraction is high. Until you are able to deal with more of it you may not feel the impact. My dear brother, it is enormous!”
Engr. Okaa lamented that collapse of trust in the operator pushes aggrieved customers to resort to self help, using fraudulent Disco workers to influence changes and evade payment of disputed bills.
“Self-help makes the business of touting and sharp practices thrive; and insider collusion is high in the evasion of payment as physical interface with the field men makes sharp practices very possible,” he said.
Upstream players in the power sector including generation companies and gas producers have severally decried huge debts owed them and advised the Discos to evolve strategies and efficiently plug all revenue leakage conduits to guarantee backflow of commercial returns to players in the full service loop.
There is pan-industry convergence on the need for the distribution companies to get more efficient with their billing and revenue collection processes. Customer satisfaction has been canvassed as the most potent incentive for prompt payment of bills. And the bills must be convincing and acceptable to customers for seamless payment to happen.