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Power tour

Another look at preconditions for direct power purchase from Gencos

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As part of efforts to stop the ongoing rejection of loads by Distribution Companies (Discos) from Generation Companies (Gencos), the federal government has agreed the bulk sales of power direct to heavy users, a development so much loved by Gencos.

This is coming as stakeholders await the details of the regulatory and operational guidelines for the eligibility operations from the NERC before the end of this week.

However, the new idea comes with strategic preconditions.

The beauty of the new idea is that it permits electricity customers to bypass the Distribution Companies (DisCos) to buy power directly from the Generation Companies (GenCos). It saves Maximum Demand customers such as industries, companies and others, the agony of inadequate power supply for their use.

Although, the eligibility categorisation drew criticisms on the basis that such a system would create class distinction among electricity consumers with attendant preferential treatment.

But the GenCos argued that it would enable it to achieve optimum power generation capacity and evacuate stranded power not taken by the Nigeria Bulk Electricity Trader (NBET) and the DisCos.

Business Hilights recalls that the Minister of Power, Works and Housing, Mr. Babatunde Fashola, had on May 15, this year, declared four categories of eligible customers in the Nigeria Electricity Supply Industry (NESI), based on the provisions of Section 27 of the Electric Power Sector Reform Act 2005, whereby eligible customers are permitted to buy power from a licensee other than the DisCos, and therefore directed Nigeria Electricity Regulatory Commission (NERC), to work out the modalities.

The first category of eligible customers comprise of a group of end-users registered with the Commission, whose consumption is no less than 2MWhr/h and connected to a metered 11kV or 33kV delivery point on the distribution network, and subject to a distribution use of system agreement for the delivery of electrical energy.

The next category of eligible customers are those connected to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy.

Other categories of customers are those with consumption in excess of 2MWhr/h on monthly basis and connected directly to a metered 33kV delivery point on the transmission network under a transmission use of system agreement.

Eligible customers in this category must have entered into a bilateral agreement with the distribution licensee licensed to operate in the location, for the construction, installation and operation of a distribution system for connection to the 33kV delivery point.

The last category are eligible customers whose minimum consumption is more than 2MWhr/hr over a period of one month and directly connected to the metering facility of a generation company, and has entered into a bilateral agreement for the construction and operation of a distribution line with the distribution licensee licensed to operate in the location.

The declaration provides that at least 20 per cent of the generation capacity added by the existing or prospective generation licensee to supply eligible customer must be above the requirement of the eligible customer and is supplied under a contract with a distribution or trading licensee at a price not exceeding the average wholesale price being charged electricity distribution companies by the Nigerian Bulk Electricity Trader Limited.

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