Nigerian property owners can finally heave a sigh of relief as their rental properties will no longer be blacklisted by potential tenants because of unpaid electricity bills left by old tenants.
The Nigerian Electricity Regulatory Commission (“NERC”) has passed a new law that stops Electricity Distribution Companies (“DisCos”) from imposing the electricity supply debt left by old tenants upon new tenants.
By way of background, NERC was established in 2005 by Section 31(1) of the Electric Power Sector Reform Act (“EPSRA). Part of its functions included establishing appropriate customer rights and obligations regarding the provision and use of electricity services (see Section 32(2)(c) of the EPSRA 2005) and making regulations for the discharge of its functions and for the conduct of its proceedings, consultations and hearings, including procedures for the participation of licensees, consumers, eligible customers and other persons (see Section 45(2) EPSRA 2005).
The concept of consumer rights protection has been a core element of business history from as far back as the Roman era. Wherever trade, and exchange of goods and services, existed, there has been a concurrent need to ensure the protection of buyers and users of these goods and services against unscrupulous business owners and harmful business practices.
Until 2005, however, this concept was virtually non-existent in the business of electricity supply and trading in Nigeria. Under the defunct National Electric Power Authority (“NEPA”) and the Power Holding Corporation of Nigeria (“PHCN”), electricity customers were left at the mercy of NEPA and its officials. Modes of redress and complaint were slim, dim and undefined.
This deplorable culture was promoted by the NEPA Act 1972, which expressly provided that “the Authority (i.e. NEPA) shall in no case be under any obligation to pay damages or compensation for loss, damage or inconvenience caused to any consumer through any suspension, failure, discontinuance or whole or partial interruption of the supply of electricity, howsoever caused.” See Section 12(2) of the NEPA Act.
To make things worse, NEPA and its officials were also deemed to be public officers who were covered by the Public Officers Protection Act (see Section 1(4) of the NEPA Act), so any aggrieved consumer could not bring any claim against them in court if s/he did not do so within three (3) months of the harm they caused.
Essentially, NEPA was permitted by the law to mismanage electricity supply howsoever it liked and could not be held accountable for any damage suffered by consumers.
Little wonder there was no incentive for it to deliver optimal service to consumers.
All of that changed with the reforms introduced by the EPSRA 2005.
Soon after the establishment of NERC, it passed a slew of regulations which institutionalised a new consumer rights regime in the Nigerian Electricity Supply Industry. One of those regulations was the Meter Reading, Billing, Cash Collections and Credit Management for Electricity Supplies Regulations, 2007. Among other things, this regulation sought to legislate on how customers should be billed on metered and unmetered supply.
Regrettably, but inevitably, every solution always creates a new set of challenges.
The Meter Reading, Billing, Cash Collections and Credit Management for Electricity Supplies Regulations was no exception.
A challenging situation was created by Section 2 of this regulation, which provided for final meter readings to be taken when a customer is vacating any premises, and who would be responsible for paying bills that had accrued while the customer was living there.
The challenge was, the DisCos interpreted “customer” in this section to mean the building itself, so if a tenant packed out of any premises, the building was responsible for paying any electricity debt left by that customer.
So, new tenants who moved into buildings that were owing electricity bills would be routinely disconnected by DisCos for non-payment even after paying their current charges.
If a prepaid meter was installed in the premises, the debt would be migrated into the meter and the new tenant would be forced to endure percentage deductions from any credit units s/he purchased for the meter, which was diverted by the DisCo to pay the old debt.
To avoid such situations, tenants had to do due diligence on any premises they wanted to rent to confirm if it was owing any electricity debt. If it was owing, the tenant would not pay for the premises, otherwise s/he would be forced to pay a debt that s/he did not incur.
So, landlords would lie to prospective tenants about the existence of debt on the premises. If the tenant did not check and afterwards found out that there was a debt, s/he would either pay it to enjoy uninterrupted power supply or would demand rent refund.
The Consumer Protection Regulations (“the CPR 2023”), which came into force on 29th March 2023, has changed that narrative.
Section 29(3) of the CPR 2023 says, “Where a Distribution Company keeps to the appointment (for a final meter reading) but is unable to carry out the meter reading due to the fault of the customer, the Distribution Company shall disconnect supply to the premises and assess a final bill on the customer. The customer that consumed the electricity on the premises shall remain liable for the debt and it shall be the responsibility of the Distribution Company to recover the debt from him. In no circumstances shall this debt be transferred to a new customer that occupies the premises.” (I added the words in brackets for easier understanding)
Buildings, or the apartments in those buildings, will no longer be encumbered with the debt left by old tenants.
For this to happen, an outgoing tenant should inform the DisCo that s/he is leaving the premises and request for a final meter reading (if there is a post-payment meter). This is not new. It existed under the Meter Reading, Billing, Cash Collections and Credit Management for Electricity Supplies Regulations, but because most, if not all, post-payment customers were unmetered, an outgoing tenant would not bother to ask for a final meter reading. Because there was no meter to read.
The essence of requesting for a final meter reading even when the premises is unmetered is to inform the DisCo that the tenant is leaving so billing can be suspended on the account and the premises disconnected from supply.
If the tenant does not notify the DisCo, the landlord can do so.
If both landlord and old tenant do not inform the DisCo, the new tenant can do so.
All s/he needs to do is send a letter (or email) to the DisCo on the first day of moving into the premises saying, I have moved in, and keep the acknowledgement copy of the letter (or email).
Once the tenant does this, s/he will only be liable for payment of bills from the date s/he moved in – Section 29(5) of the CPR 2023.
Peace. Perfect peace. At last.
And if the DisCo attempts to collect the old bill from the tenant (from previous experience, they will always make the attempt), all a tenant needs to do is to initiate a complaint under Sections 43(7) and 43(9) of the CPR 2023 and NERC will force the DisCo to do the right thing.
The complaint resolution process is relatively easy and simple and will be explained in subsequent articles.
Emeka D. A. Ojoko, ACIArb, ABR, AICMC, FIDR