TOPIC: Nigerian Energy Landscape: Understanding The ... · PDF fileNigerian Energy Landscape:...

Sam Amadi, PhDSam Amadi, PhDChairman/Chief Executive Officer

Nigerian Electricity Regulatory Commission

(NERC)

Nigeria

TOPIC:TOPIC:

Nigerian Energy Landscape: Nigerian Energy Landscape:

Understanding The Metering ClimateUnderstanding The Metering Climate

OutlineOutline1. Introduction2. Overview of the Nigerian Energy Sector3. Institutions Associated with Metering in the NESI4. Metering Points in the NESI5. Metering Issues in the NESI 6. Consequences Of These Issues7. Metering Challenges 8. Drivers for Smart Metering in Nigeria 9. Historical Metering And New Trends10. Factors Bringing Resistances to Cutting Edge Solutions11. Components of Successful Implementation Strategies12. Progress so far…13. Conclusion

� Nigerian Electricity Regulatory Commission (NERC) is mandated by the Electric Power Sector Reform Act (EPSR Act 2005) in S.32(1b) to maximize access to electricity services by promoting and facilitating consumer connections to distribution systems in both rural and urban areas.

� The Commission since 2007 has identified the pivotal importance of metering in meeting and improving the customer experience which has been full of mixed reactions when the country’s electricity sector was totally under a state-owned monopoly.

IntroductionIntroduction

� Access to electricity supply in Nigeria is currently less than 50% of the Country’s population.

� Total customers figure is about 5.4 million.� There is a very wide metering gap in the Nigerian Electricity

Supply Industry (NESI) with only about 66.8% metered customers.

� Utilities are unable to meet the growing demand for power, due to myriad of problems ranging from inadequate generation resources, poor gas facilities, low energy mix, weak and inadequate transmission network, poorly-managed distribution network leading to low access and high emergency generation.

Introduction Introduction (Cont’d)

Data Value

Electricity - production: 30.66 Million MWh (2011 est.)

Electricity - consumption: 28.51 Million MWh (2011 est.)

Electricity - exports: 1.34 Million MWh (2010)

Electricity - imports: 0 kWh (2011)

Oil - production: 2.458 million bbl/day (2010 est.)

Oil - consumption: 279,000 bbl/day (2010 est.)

Oil - exports: 2.102 million bbl/day (2009 est.)

Oil - imports: 187,700 bbl/day (2009 est.)

Oil - proved reserves: 37.2 billion bbl (1 January 2011 est.)

Natural gas - production: 23.21 billion cu m (2009 est.)

Natural gas - consumption: 7.216 billion cu m (2009 est.)

Natural gas - exports: 15.99 billion cu m (2009 est.)

Natural gas - imports: 0 cu m (2009 est.)

Natural gas - proved reserves: 5.292 trillion cu m (1 January 2011 est.)

Source: 2010 Annual Market Report (Market Operator)2011 EIA Facts File

Overview of the Nigerian Overview of the Nigerian EnergyEnergyIndustryIndustry

� The Nigerian Electricity Regulatory Commission (NERC) oversees the Electricity Industry only.

� The Oil and Gas sector has several entities which oversee the upstream (Ministry of Petroleum, Nigerian National Petroleum Corporation (NNPC))while the Department of Petroleum Resources (DPR) oversees the petroleum downstream sector. The Petroleum Products Price Regulatory Agency (PPPRA) sets final user tariff for petroleum products.

� The gas sector has no commercial distribution system in Nigeria like the electricity sector.

� This presentation focuses only on the Electricity Met ering Climate in Nigeria.

Overview of the Nigerian Overview of the Nigerian EnergyEnergyIndustry Industry (Cont’d)

66

Overview of the Nigerian Electricity Overview of the Nigerian Electricity Supply IndustrySupply Industry

Source: KPMG Electricity Sector Report 2011

Overview of the Nigerian Electricity Overview of the Nigerian Electricity Supply Industry Supply Industry (Cont’d)

Overview of the Nigerian Electricity Overview of the Nigerian Electricity Supply Industry Supply Industry (Cont’d)

Source: Metering Inquiry Committee 2012 (Unpublished)

� Utilities – 6 GENCOs, 1 No Transmission Company and 11 No SC-DISCOs

� NERC – Regulates metering through the Market Rules, Metering Code, Connection and Disconnection Agreements etc, and other regulations or orders.

� Standards Organization of Nigeria (SON) – Mandates Standards� Market Operator � Consumers – Residential, Commercial and Industrial� Meter Manufacturers and Vendors

� Meter Test Stations (MTS) – Oshodi, Port Harcourt, Kaduna and some private MTS

Institutions Associated with Institutions Associated with Metering in the NESIMetering in the NESI

Metering Points in the NESI Metering Points in the NESI (Grid)(Grid)

Most of these are unmetered, about 31 meters are presently been installed

Most of these are unmetered, about 31 meters are presently been installed

Source: 2010 Annual Market Report (Market Operator)

Metering Systems in the NESI are characterized by the following shortcomings:

- Substantial number of metered customers are billed, but still onestimation .

- Faulty Installations.- Divergent/Conflicting Choice of Technology (functionalities) from

Disco to Disco.- Maintenance (the MMF Saga).- Administration (New Services, Ownership, Replacements,

Timeliness, etc).- Penetration.- Tampering and Bypassing.

Metering Issues in Metering Issues in the the NESINESI

� Estimations and Overbilling

� High Technical Losses

� Poor Energy Accounting

� Poor Collection Efficiency

� Customer dissatisfaction

Consequences of These IssuesConsequences of These Issues

The Metering Code expects of any Metering System:� Adherence to minimum standards� Accuracy of measurement� Efficient transmission of data through adequate communications

network� Cost effectiveness� Security of metering system and data� Adequate feedback for parties served by meter� Total energy accountability� Fulfillment of clear Owner and User responsibilities

Metering ChallengesMetering Challenges

Historical Metering And New TrendsHistorical Metering And New Trends

Expectation Electromechanical Electronic Prepayment

Future Smart Metering with

Prepayment and remote

disconnect/reconnect

Adherence To Minimum

Standards

Yes Yes Yes Yes

Accuracy Of

Measurement

Within a range Yes Yes Yes

Adequate

Communications

Network

No No No Yes

Cost Effectiveness

Affordable without budget

function

Affordable without

budget function

Costly with budget

function

High Capital outlay with budget

function

Security Of Metering

System And Data

Tamper, wrong reading, and

bypass

Bypass Bypass Highly secure

Adequate Feedback For

Parties

No No No for keypad but

yes for smart card

through manual

means

Yes

Total Energy

Accountability

No No No Yes

Owner And User

Responsibilities

Yes Yes Yes Yes

Source: KEMA

� Anti-theft of electricity and surveillance capability� Energy accounting and Loss control� Remote collection of real-time data for billing and analysis on

demand and on schedule� Guaranteed cash flow through popular PPM functionality

(solving the problems of inflated billing efficiency and poor collection efficiency)

� Customer control of budget and enhanced decision making � Smart metering already in Nigeria in the form of Automated

Meter Reading (AMR) for MD customers and Grid metering

Drivers for Smart Metering in NigeriaDrivers for Smart Metering in Nigeria

� Existing PPM clusters may be upgraded to smart metering where possible

� Scalability, openness and flexibility of smart metering to dovetail into future technologies (e.g. smart grid)

� Bad debt recovery management from time of cut-over (this can even help defray the cost of smart metering roll-out)

� Regulatory demands (e.g. the ability to automatically load free units to consumers who qualify under the Power Consumer Assistance Fund or automatically apply loss adjustment factors)

� The Aggregate Technical, Commercial and Collection loss reduction model for privatization adopted by NCP.

� A stepping stone to Smart Grid

Drivers for Smart Metering in Nigeria Drivers for Smart Metering in Nigeria (Cont’d)

Factors Bringing Resistances to Factors Bringing Resistances to Cutting Edge SolutionsCutting Edge Solutions

� Fear of technology� Loss of jobs� “Too sophisticated for us”: gradual ascent vs leap-frogging� Fast-paced obsolescence

� High capital outlay� The diversification argument is contradictory

� Combine electronic credit meter, prepayment meter, Advanced Metering Infrastructure, etc.

� Privacy issue� Cyber-security

Components of Successful Components of Successful Implementation StrategiesImplementation Strategies

� Need for Policy Framework� Need for Regulatory Framework (minimum

standards, minimum functionalities required, registration of Meter Service Providers etc)

� Need for cost benefit analysis (FMP/NERC)� Strategy: phased implementation over years� Training� Customer awareness

� The Contextual Environment

(economic, political, and

administrative viability)

�Objectives and Goals

�Action Plan (Short term, Medium

term, Long term)

� Instruments e.g. technological

prescription, subsidy,

legislation etc

�Deliverables

� Policy Outcomes e.g. consumer

choice, security of electricity supply

etc

� Structural Outcomes e.g.

attraction of private investment,

competition etc

� The Contextual Environment

(economic, political, and

administrative viability)

�Objectives and Goals

�Action Plan (Short term, Medium

term, Long term)

� Instruments e.g. technological

prescription, subsidy,

legislation etc

�Deliverables

� Policy Outcomes e.g. consumer

choice, security of electricity supply

etc

� Structural Outcomes e.g.

attraction of private investment,

competition etc


�Market Rules (detailing

settlements and costs)

�Metering Code

(highlighting Minimum

Standards and

Communication etc)

�The Metering Market

Procedure (detailing

payment system in the bulk

electricity market)

�Others including:

� - Grid and Distribution

Codes

�Market Rules (detailing

settlements and costs)

�Metering Code

(highlighting Minimum

Standards and

Communication etc)

�The Metering Market

Procedure (detailing

payment system in the bulk

electricity market)

�Others including:

� - Grid and Distribution

Codes





�The Ministry needs to

check policy effect on the

citizenry and cost effect

on the government (if

applicable)

�NERC needs to see

effect on the operators

while considering overall

effect on the final rate

payers

�The Ministry needs to

check policy effect on the

citizenry and cost effect

on the government (if

applicable)

�NERC needs to see

effect on the operators

while considering overall

effect on the final rate

payers





Strategy: Phased implementation

through Project Monitoring

Office domiciled at NERC.

1. Grid Meters

Ensuring all boundary points on

the Grid have advanced metering

and have redundant check meters

as required by the Metering Code.

2. Industrial/Commercial/Institutio

nal Meters

Change all substandard MD

meters to smart meters

Ensure that all MD customers

come under smart metering as in

the PHCN Eko Industry

Competence Center (ICC)

initiative.

3. Residential Customers

Also in Phases (four) with definite

timeframe

Strategy: Phased implementation

through Project Monitoring

Office domiciled at NERC.

1. Grid Meters

Ensuring all boundary points on

the Grid have advanced metering

and have redundant check meters

as required by the Metering Code.

2. Industrial/Commercial/Institutio

nal Meters

Change all substandard MD

meters to smart meters

Ensure that all MD customers

come under smart metering as in

the PHCN Eko Industry

Competence Center (ICC)

initiative.

3. Residential Customers

Also in Phases (four) with definite

timeframe




� Training is critical to the successful

privatization of the Nigerian Electricity Supply

Industry (NESI) and is given due importance in

the MYTO II.

� Customer Awareness through Consumer

Assemblies held regularly throughout the whole

Country; meeting consumers and getting their

buy-in on electric power issues, particularly

tariff, metering and connection issues

� Training is critical to the successful

privatization of the Nigerian Electricity Supply

Industry (NESI) and is given due importance in

the MYTO II.

� Customer Awareness through Consumer

Assemblies held regularly throughout the whole

Country; meeting consumers and getting their

buy-in on electric power issues, particularly

tariff, metering and connection issues





� The Commission has successfully passed regulations with implications on metering in the areas of:� Independent Electricity Distribution Network (IEDN)� Embedded Generation� Independent Electricity Transmission Network (IETN)

� The Commission instituted a panel of inquiry called “Metering Inquiry Committee” which was mandated to hold wide ranging public consultations on metering issues nationwide. It has held public hearings in all the six (6) geopolitical zones of Nigeria and is about to submit its findings.

Progress so farProgress so far ……

� NERC commissioned an international Consultant on issues of Aggregate Technical, Commercial and Collection (ATC&C) Losses, which is the new system of Loss estimation and handling. This also led to redesign of the RfPs for the privatization of the state-held Utility Companies (Gencos and Discos)

� The ATC&C project is now fully on course with a partnership between NERC and National Space Research and Development Agency (NARSDA), which is Nigeria’s satellite agency, for more sophisticated and advanced satellite mapping, monitoring and calculation strategies.

Progress so farProgress so far …… (Cont’d)

� The Commission is presently reviewing the electricity tariff rate, as mandated by the EPSR Act 2005. The Commission has developed a tariff methodology as empowered by Section 76 of the Act called Multi-Year Tariff Order (MYTO) .

� The MYTO, a 5year tariff methodology order, is presently in its second run (MYTO II).

� The Consumer is, once more, the thrust of the order where, for simplicity, lesser consumer classification was considered, and distribution areas are categorized to have different, realistic tariff rates.


� The Commission is presently working on Feed-in-Tariffs for both Bulk Renewable Electricity Generation and Distributed (Embedded) Generation.

� Nigeria, at present, generates far less than its demand and as such rationing and allocation methodology has to be devised.

� To discourage losses, load allocation to Discos is based on achievements in meter deployment.


� The Nigerian Electricity Supply Industry is undergoing massive changes through the reform and privatization program.

� Ownership, operation, consumer relations, technological and investment decisions are all reconsidered in the whole value chain of the industry.

� These efforts are already having positive results with more energy produced by the generators, higher revenue streams, more industry incident and performance reportage, more consumer connections, important foreign and local investments in all electricity sub-sectors.

� The Nigerian Consumer is expected to continually gain more from the current reforms of the electricity sector.

� A critical success factor is effective metering.

ConclusionConclusion

THANK YOUNigerian Electricity Regulatory Commission (NERC)Nigerian Electricity Regulatory Commission (NERC)Plot 1099, 1st Avenue, off Shehu Shagari Way, CBD,

PMB 136, Garki Abuja, Nigeria

w: www.nercng.org; e: [email protected]

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