Walk through the Eligible Customer Regulation Dr. Seun Amoda 1
INTRODUCTION 2
The Nigerian Grid Voltages 330kV 132kV 33KV 11KV 415V 3
The Nigerian Grid 4
Eligibility - EPSRA 2005 Section 100 of EPSR Act defines: eligible customer as a customer that is eligible, pursuant to a directive or directives issued by the Minister under Section 27, to purchase power from a licensee other than a distribution licensee. Section 27 says The Minister may issue a directive to the Commission specifying the class or classes of end-use customers that, from time to time, shall constitute eligible customers under this Act. An Eligible consumer that can purchase power from a licensee of NERC, other than a Distribution Company. In other words, once declared an eligible customer, that end-user customer can directly enter into a power purchase contract with a GENCO for power supply and ceases to be a customer of the Distribution Company. 5
Overview The Minister of Power, issued a policy directive to Nigerian Electricity Regulatory Commission (NERC) declaring four categories of eligible customers in the Nigerian Electricity Supply Industry (NESI) in accordance with Section 27 of the Electric Power Sector Reform Act (EPSRA) 2005. The declaration permits electricity customers to buy power directly from the generation companies as in line with the provisions of Section 27 of the Act whereby eligible customers are permitted to buy power from a licensee other than electricity distribution companies. 6
THE REGULATION 7
Objectives The objective of these Regulations are to provide standard rules to achieve the following: a. Facilitate competition in the supply of electricity, promote the rapid expansion of generation capacity and open up a window for improvement in quality of supply. b. Encourage the opening up of third party access to transmission and distribution infrastructure as a precursor to full retail competition in the Nigerian electricity market. c. Allow licensed generation companies with uncontracted capacity to access unserved and underserved customers thus improving the financial liquidity of the electricity industry. d. Enhance the stability and operational efficiency of generation companies arising from the flatter load profiles of Eligible Customers and possibly lower technical losses, depending on the required network interconnection. 8
Criteria/Category 1 A customer or group of end-use customers registered with the Commission for the purpose that is connected directly to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for the connection and for the delivery of electrical energy; 9
Criteria/Category 1 10
Criteria/Category 2 A customer whose consumption is more than 2 MWh/h over the course of one month, that is connected directly to a metered 33kV delivery point on the transmission network under a transmission use of system agreement. And has entered into a bilateral agreement for the construction, installation and operation of the distribution system used to connect the customer to the 33kV delivery point, with the distribution licensee licensed to operate in the location where the customer and the 33kV delivery point are located; 11
Criteria/Category 4 A customer whose consumption is more than 2 MWh/h over the course of one month, that is connected to a metered 33kV delivery point on the distribution network of a distribution licensee under a distribution use of system agreement with such distribution licensee for the connection and for the delivery of electrical energy 12
Criteria/Categories 2 and 4 13
Criteria/Category 3 A customer whose consumption is more than 2 MWh/h over the course of one month, that is directly connected through a metered delivery point, to the generation facility of a generation licensee it intends to purchase electrical energy from And has entered into a bilateral agreement for the construction, installation and operation of the distribution system used to connect the customer to the generation facility with the distribution licensee licensed to operate in the location where the generation facility and the customer are located; 14
Phase 1 to Phase 2 Minimum of eleven (11) activated eligible customer transactions spread over a minimum of six (6) Discos. A declaration from the System Operator (verified by the Commission) on the technical capacity of TSP and DisCos to manage more Eligible Customers. The Commission's review of the impact of phase 1 implementation on the revenue of distribution companies within six months after the commencement of the initial switch date. Review to the satisfaction of the Commission on the revenue impact on DisCos within 6 months after commencement of the initial switch date 15
Phase II: Criteria/Category 5 A customer whose consumption is more than 2 MWh/h over the course of one month, that is connected to a metered 11kV delivery point on the distribution network of a distribution licensee under a distribution use of system agreement with such distribution licensee for the connection and for the delivery of electrical energy 16
Phase II: Criteria/Category 5 17
Not up to 2MWh/h???->Site Aggregation The Regulations require groups of end-users applying to the Commission for registration as Eligible Customers to satisfy the following conditions: each end user to be aggregated must be connected to the same Distribution Licensee's network, an IEDN or an off-grid licensee, and are connected to the same feeder; the end-users to be aggregated must incorporate a company (special purpose vehicle) to apply for registration as an Eligible Customer on behalf of the group of end-users, and execute the relevant transaction documents; each end-user site must be located within a single geographic network as determined by the Commission; and a minimum of 500KVA must be consumed at each end-user site. 18
Criteria to Supply Power to EC Hold a Generation License A licensee that has been issued a generation license by the Commission pursuant to section 64 (3) of the Act. Or have a Trading License A licensee that has been issued a trading license pursuant to section 68 of the Act. 19
Contractual Obligations PPAs between EC and Supplier TuOS agreement between EC and TCN/TSP DuOS agreement between EC and Disco Market participation agreement between EC and MO. Bilateral agreement between EC and Disco for the construction, installation and operation of a distribution system to be used for the supply to the customer Execution of other agreements as may be prescribed by the Commission. 20
Metering and Financial Obligation Meters at Trading Points (Interchange) (Metering Code) Letter of Credit or Bank Guarantee in favour of the Market Operator in accordance with the Market Rules to cover : Market administration charges, TUoS charge and DUoS charge and other charges 21
Switching Rules for EC and Disco EC must provide a three months notice to Discos before exiting. Expect for Force Majeure Similarly, Eligible Customers that wish to reconnect to a Distribution Licensee must provide at least three (3) months notice to ensure adequate planning for reconnection (unless waived by Disco). Will be put on tariff rate with similar customers 22
Switching Rules for EC and Suppliers EC informs current Supplier, Subject to current PPA termination Clause Execute PPA with New Supplier and other Agreements. Before Termination MO Housekeeping Terminates current Supplier Switch to new Supplier 23
RIGHTS of EC: Access to Network There is a regulatory intent to provide a third party; access to transmission and distribution network by ensuring: fair access; compliance with approved DUoS and TUoS tariffs; and compliance with the Market Rules, Technical and Codes compliance with Quality Standards for supply of electricity and maintenance of frequency and regulation of voltage. Eligible Customers that wish to secure access to Transmission and Distribution Networks are required to apply to the TCN or Disco. Decision must be given in 30 days. Unfavorable decisions can be appealed 24
RIGHTS of EC: SUPPLIERS CHOICE Freely choose a supplier contract the pricing, quantity, and time of supply pursuant to the Grid Code, Market Rules and general conditions for delivery and supply of electricity. May contract for electricity supply from more than one supplier provided that adequate infrastructure is available for the SO/MO to reliably account for energy quantities. The contract for access to network connection or any other contract shall not contain any provision to limit the eligible customer's choice of supplier or impose a discriminatory fee, in case of supplier switching. 25
OBLIGATIONS of EC Enter into a contract (PPA) for supply with the holder of a Generation or Trading License Enter into a contract to access the transmission and distribution network Comply with the requirements for offtake on contracted quantities of electricity and peak capacity at each connection point. Notify the Commission of any change in corporate identity, address and service location. 26
OBLIGATIONS of EC Meet all financial obligations pursuant to the agreements for the supply of electricity and in a timely manner: As contracted in the Power Purchase Agreement For use of the transmission network, ancillary services and system operations at the tariff prescribed by the Commission. For use of the distribution network at the tariff prescribed by the Commission. For the costs and settlement of balances pursuant to the Market Rules. For market administration charges. 27
Pricing PPA price determined on bilateral basis Transmission Use of System Charges (where applicable) Distribution Use of System Charges (where applicable) Regulatory fees Ancillary Service Charges Market Administration and System Operation charges 28
Other Costs Competition Transition Charge The Minister may upon consultation with the President, issue a directive for the collection of Competition Transition Charges from Eligible Customers in accordance with section 28 of the Act. Power Consumer Assistance Fund. Rural Electrification Fund 29
Treatment of Energy Differences Energy differences may arise when: a. An Eligible Customer is unable to take the generated contracted quantities; or b. A generator is unable to deliver contracted quantities. Such differences shall be settled in accordance with the provisions under Power Purchase Agreement and the balancing mechanism developed by the Market Operator pursuant to the provisions in the Market Rules. 30
Supplier of Last Resort Contingent supplier to an Eligible Customer in the event of a failure by the contracted supplier. A Distribution Company shall act as supplier of last resort to an Eligible Customer operating within its network coverage area. And the service shall be provided under a provisional arrangement at a price to be mutually agreed by the contracting parties. 31
Questions 32