The Nigerian Electricity Regulatory Commission (NERC) has instructed electricity Distribution Companies (DisCos) to provide compensation to Band A customers who experienced power supply shortfalls due to generation constraints across the Nigerian Electricity Supply Industry (NESI) between February and March 2026.
Directive Details
The directive, issued as Directive No. NERC/2026/002, is titled the Special Compensation of Band A Customers Arising from Grid Generation Constraints. It follows significant generation shortages that hindered some DisCos from meeting the minimum service commitments required under the Band A tariff framework.
According to NERC, the generation shortfalls were primarily caused by inadequate gas supply and vandalism targeting critical gas and transmission infrastructure. These factors were deemed beyond the direct operational control of the DisCos.
Consumer Protection Focus
The development occurs amid ongoing concerns about the power sector's ability to sustain service commitments under the Service-Based Tariff regime, particularly given recurring gas supply constraints and attacks on critical electricity infrastructure. NERC stated that the special compensation arrangement underscores its dedication to consumer protection while maintaining the stability and sustainability of the electricity market.
The compensation scheme covers the period from February to March 2026 and aims to protect consumers who paid premium tariffs for higher levels of electricity supply but received lower service levels due to constraints within the power value chain.
Compensation Framework
Under the directive, Band A feeders that recorded an average daily supply of between 18 and 20 hours during the affected period will continue to be compensated according to the existing framework under Addendum No. NERC/2024/003. This compensation applies to both Maximum Demand (MD) and Non-Maximum Demand (Non-MD) customers connected to the affected feeders.
For Band A feeders that recorded less than 18 hours of daily electricity supply, the Commission stated that these feeders would not be downgraded during the covered period despite falling below the service threshold for Band A classification. Instead, eligible customers will receive special compensation.
Compensation Amounts
NERC specified: "Eligible customers will receive special compensation as follows: Non-MD customers: compensation equivalent to 20 per cent of the approved February 2026 energy cap applicable to the affected feeder. MD customers: compensation equivalent to 20 per cent of the average energy billed per MD customer in February 2026."
Prepaid customers must receive the compensation through token credits, while postpaid customers will benefit from bill adjustments.
Implementation Timeline
NERC mandated that compensation for February 2026 must be completed by May 31, 2026, and compensation for March 2026 must be concluded by June 30, 2026. The Commission also barred DisCos from using the compensation credits to offset customers' outstanding debts. Customers must be adequately informed about the value of compensation received and the specific period it covers.
NERC stated it will continue to monitor implementation and verify compliance by DisCos to ensure all eligible customers receive the compensation due to them.
