Could There Be An Alternative Methodology for Capping of Electricity Bills?

Distribution Company (“DisCo”) have always complained that the extant monthly Capping Orders issued by the Nigerian Electricity Regulatory Commission (“NERC”) has a significant negative impact on DisCos’ billing efficiency. Capping energy consumption of customers remains estimated billing and can never be 98% accurate. Unmetered customer living in the midst of high energy vending and consuming customers are likely to suffer high energy caps reflective of their clusters, while its vice versa for high consuming energy customers living in a lower middle-class residential cluster. Accelerated meter deployment and mass metering programmes remain the best antidote to capping of estimated electricity bills.

Nevertheless, could there be an alternative methodology for capping of electricity bills for unmetered customers pending the metering of all end-use customers in the Nigerian Electricity Supply Industry (“NESI”)? Yes, I believe that an alternative capping methodology that will be justiciable to both DisCos and customers is possible taking cognizance of the following parameters –

1. The use of advanced data analytics and machine learning algorithms to estimate consumption more accurately based on historical data, customer profiles, and similar household consumption pattern. DisCos should consider historical transaction data gathering from Pre-Paid Meter (“PPM”) categories by mining three (3) months’ average sets of data from date of meter installation and (3) months average sets of date from immediate past transactions and the better average of the two (2) data sets may be adopted for further processing.
2. Outliers should be removed from the data sets and limiting data should be employed between to prevent skewed outcomes.
3. The current NERC capping methodology does not recognise energy recovered through revenue protection activities. However in an alternative methodology, recovery bills should be recognized and added to actual energy sold for the period under review.
4. DisCos can further improve the accuracy of the proposed methodology through installation of Distribution Transformer (“DT”) metering. By installing meters on DTs, DisCos can measure the total amount of energy being delivered to a specific area of group of customers. The aggregate data can be used to estimate the consumption of unmetered customers within that area.