Nigerian Electricity Regulatory Commission Introduces Compensation Package for Customers
The Nigerian Electricity Regulatory Commission (NERC) has unveiled a special compensation initiative aimed at eligible Band A electricity customers whose supplies were adversely affected by power generation shortages from February to March 2026. This framework, established under Directive No. NERC/2026/002, addresses disruptions caused by grid generation constraints affecting certain consumer segments.
In an official announcement released on Wednesday, NERC emphasized the importance of this initiative, stating that it was essential due to significant generation deficits within the Nigerian Electricity Supply Industry (NESI). The regulatory body noted that electricity distribution companies (DisCos) fell short of their commitments to supply adequate electricity to Band A customers, leading to widespread dissatisfaction.
In recent months, urban areas and communities across Nigeria have experienced an increase in power outages, pushing many households and businesses to seek alternative sources of energy. As electricity availability dwindles, many are turning to costly solar panel systems and generators. However, the rising fuel prices have added to the financial burdens faced by consumers struggling with unreliable power supply.
NERC has identified several factors contributing to these extended power shortages, particularly inadequate gas supplies and infrastructure vandalism. These issues, it noted, fall outside the operational control of the electricity distributors. Data from the commission indicated that as of April 2026, the nation’s grid-connected power plants were operating at a mere 31% of their total installed capacity, with an average generation of 4,286 megawatts (MW) against a potential 13,625 MW.
Despite a slight 5% improvement in available power generation compared to March, ongoing voltage and frequency instability has severely affected grid reliability. The report highlighted that the 28 grid-connected power plants averaged a generation rate of 4,048 megawatt hours per hour (MWh/h), achieving a load factor of 94%. Such data underscores persistent structural issues in Nigeria’s electrical sector, where installed capacity significantly overshadows both available and distributable power.
Compensation Framework Overview
The compensation plan introduced by NERC will extend back to the power shortages experienced from February to March 2026. For Band A feeders that consistently provided between 18 to 20 hours of daily electricity, the existing compensation framework from Addendum No. NERC/2024/003 will be applicable. Meanwhile, feeders offering less than 18 hours daily will enter a special compensation mechanism, while retaining their Band A status.
Under this new arrangement, eligible non-maximum demand (non-MD) customers will receive compensation amounting to 20% of the approved energy cap for February 2026 linked to their specific feeder. For maximum demand (MD) customers, the compensation reflects 20% of the average charges billed per MD customer during that same period.
Compensation Process and Timelines
NERC has specified the compensation process for both prepaid and postpaid customers. Prepaid consumers will receive compensation via token credits, while postpaid customers will see adjustments on their bills. The commission mandated that all compensations related to the February 2026 shortfall be completed by May 31, 2026, and those pertaining to March be settled by June 30, 2026. Additionally, DisCos are prohibited from offsetting these compensation amounts against any existing customer debts.
Transparency and Consumer Protection
DisCos are obligated to clearly inform affected customers about the compensation amounts and the timeframes covered. NERC remains steadfast in its commitment to uphold consumer protections while ensuring market stability and sustainability within the electricity sector. The commission will actively monitor the implementations to verify compliance and ensure timely compensation to all eligible customers.
This initiative comes in response to increasing concerns over the reliability of energy supply, even as Band A tariffs aim to secure a minimum of 20 hours of electricity availability daily for those paying higher rates.
