The Kano Electricity Distribution Company (KEDCO) on Sunday became the latest electricity distribution company to be affected by the gale of regulatory sanctions by the electricity market operator.
The Transmission Company of Nigeria (TCN) announced in paid media advertorials that KEDCO was suspended from the market and a section of its transmission facilities disconnected from the national grid until further notice.
“The Nigerian Electricity Market Operator has today, 21st July issued Suspension and Disconnection Orders to Kano Electricity Distribution Company, KEDCO, from the Electricity Market for default in the Market Conditions/Market Participation Agreements,” the advertorials read.
KEDCO is the main electricity distribution company in Kano State.
The TCN is a government agency responsible for transmitting available electricity to distribution companies in the country.
The disconnection of the KEDCO is expected to lead to blackout in parts of Kano State.
Why KEDCO was suspended
According to the advertorials published in the TCN official twitter handle, @TCN_Nigeria, on Sunday, KEDCO was suspended for a default in observing the Electricity Operator Administered Market Conditions/Market Participation Agreements and its failure to remedy them.
Following the noticed default, the TCN said the Market Operator issued “Notice of Default” No NED/2019/004 of July 9 to notify KEDCO of the default.
The TCN said another notice of intent No. NIISO/2019/005 to suspend KEDCO from the market and restrict some of its rights was issued on July 15.
The notice was pursuant to Section 45.3.8 to request a hearing before the Market Operator to show cause why KEDCO should not be suspended from the market or disconnected from the national grid.
The KEDCO management was said to have responded to the suspension notice within five days, or two business days stipulated by the market rules.
The Kano company requested for a hearing before the Market Operator to show cause why the suspension order, the disconnection order, or both, should not be issued.
Consequently, the TCN said a three-member panel of Market Operators Institution staff and the Market Operator Enforcement Panel was constituted to hear KEDO’s case on July 19.
However, KEDCO not only failed to appear before the panel, it also did not give any reason in writing for not doing so, thereby violating Rule 45.3.9 of the Market Operator Regulations, the TCN stated.
As a result, the Market Operator directed the transmission service providers to disconnect KEDCO’s interface facilities from the national grid until the default was remedied.
The affected facilities include the 33kV feeder transmission lines at Club and Zaria Imari areas that connect the Transmission Station at Dar-Agunci.
Similar sanctions against Ikeja, Enugu DISCOs
In the last three weeks, similar suspension disconnection orders were issued against the Enugu and Ikeja DISCOs over the same allegations of infraction of the market rules.
Although the two DISCOs said their managements commenced the process to get the TCN to rescind the action against them and restore their facilities and services, TCN is yet to provide any update over the matter.
Following the sanctions against Benin and Ikeja DISCOs, TCN spokesperson, Ndidi Mbah, told PREMIUM TIMES more DISCOs would soon face the same regulatory action.
Mrs Mbah said the TCN had written to each of the other affected DISCOs in the country to request them to come forward with their remedies in compliance with the market rules.
She warned that similar fate of suspension from the market and disconnection of their facilities from the national grid may befall them if they fail to remedy their defaults within the stipulated deadline in the market rules.
Provisions of electricity market rules
The default the DISCOs were accused of failing to remedy was in line with the agreement TCN said they all agreed to comply with at all times. This has to do with Clause 3.2 of the electricity market rules on grid code, metering code, and market procedures.
Accordingly, the DISCOs were expected to, among other roles, provide metering information in a timely manner and in the approved format in accordance with the Metering Code.
Besides, they were to ensure compliance with the market procedures, provide security deposit when so required to serve as a guarantee of payment for all amounts due from their participant to the TCN as well as settle in a timely manner any payment due.
But, the TCN said all DISCOs now being sanctioned, contrary to the provisions of the agreement, failed to maintain a security cover, thereby breaching Section 45.3.1(d) of the market rules.