Network constraints: NERC approves special compensation for Tier A customers

The Nigerian Electricity Regulatory Commission (NERC) has approved a special compensation package for Grade A electricity customers affected by electricity shortages caused by grid generation constraints between February and March 2026.

The Commission announced the decision in Directive no. NERC/2026/002, published on its website on Thursday.

According to NERC, the directive was introduced in response to significant generation shortages experienced in the Nigerian Electricity Supply Sector (NESI) during the period, which prevented electricity distribution companies (DisCos) from meeting minimum service commitments promised to some Tier A customers.

The commission attributed the outages primarily to inadequate gas supply and vandalism of critical transportation and gas infrastructure, factors beyond the direct operational control of distribution companies.

Under the Directive, Tier A power supplies that have maintained an average daily electricity supply of between 18 and 20 hours during the affected period will continue to be covered by the existing compensation framework set out in Addendum No. NERC/2024/003.

The agreement applies to both maximum demand (MD) and non-maximum demand (non-MD) customers.

However, a special compensation mechanism has been introduced for A-rated PSUs that have recorded less than 18 hours of average daily supply.

NERC stated that such power supplies would not be downgraded during the period covered by the Directive despite failing to meet the prescribed service level requirements.

Under the special agreement, non-MD customers connected to affected power supplies will receive compensation equivalent to 20% of the approved February energy cap for their respective power supplies.

Likewise, MD customers will receive compensation equal to 20% of the average energy billed per MD customer in February.

The commission explained that compensation would be provided through nominal credits for prepaid customers and bill adjustments for customers with postpaid billing systems.

NERC has directed all DisCos to complete compensation for February service deficiencies by May 31, while compensation for March must be completed by June 30.

The commission also prohibited distribution companies from using offset credits to offset any outstanding debts to customers.

Furthermore, DisCos are required to clearly communicate the value and period of compensation awarded to each eligible customer.

“The Commission remains committed to protecting electricity consumers while ensuring the stability and sustainability of the electricity market,” NERC said.

It added that it will continue to monitor implementation and verify compliance by distribution companies to ensure that all eligible customers receive the compensation due to them.

The directive is part of ongoing regulatory efforts to balance consumer protection with the operational realities facing the Nigerian energy sector amid recurring manufacturing and infrastructure challenges.