Monitoring Challenges - National Association of Regulatory Utility

Report
Nigerian Electricity Regulatory Commission
Technical Regulation and Monitoring Challenges
A Presentation at NERC/NARUC Peer Review
Exchange Programme in Ghana
By
Engr. Mary E. Awolokun
Commissioner (ES&S)
2nd June 2014
Electricity on Demand
Presentation Outline
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Introduction
Legal Framework for NERC
Mandates and Objectives of NERC
NERC’s Technical Regulatory Responsibilities
Work Done on Technical Regulation and
Monitoring (Regulatory Instruments)
Technical Regulation/Monitoring Challenges
Way Forward
Other Areas of Interest
Conclusion.
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INTRODUCTION

Background and the Power Sector Reform.
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Electricity was introduced into Nigeria in 1846 about 15 years after
the utility concept took root in Britain.
National Electric Power Authority (NEPA) eventually emerged as a
monopoly after the merger of Electricity Corporation of Nigeria and
Niger Dams Authority in 1972.
Persistent Issues – led to the decision by government to embark on
reforms. The drivers of the reform include:
» Limited access to electricity ; low connection rates.
» Inadequate power generation capacity.
» Insufficient capital for investment.
» Ineffective regulation.
» Non-cost-reflective tariff.
» High technical and commercial losses.
» Inadequate transmission and distribution infrastructure.
» Inefficient use of electricity by consumers.
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LEGAL FRAMEWORK OF NERC
The Nigerian electricity sector reform process commenced in 2000 with the
National Electric Power Policy (NEPP) which was given a legal backing in
2005 with the passage of the Electric Power Sector Reform Act (2005). It
involves the following:
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Structural reform which involves unbundling or separating the potentially
competitive functions from the existing vertically integrated monopoly
(NEPA) and establishing a competitive industry structure for commercial
operations;
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Regulatory framework establishing the Nigerian Electricity Regulatory
Commission (NERC) to regulate the industry;
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Immediate opening - of the generation sector and eventually the
distribution (retail sector) to new entrants;
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Competitive neutrality – establishing governance structures for the
unbundled entities;
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Market design-establishing a national electricity market with associated
institutions: Gencos, Transco, System Operator/Market Operator, DISCOs
and Trader, with rules to manage the market;
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Privatisation - of distribution and generation companies with only the
transmission company retained under private Management;
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Open access- enabling new participants especially the generators access to
monopoly network infrastructure. NERC oversees prices and terms of
engagement.
Existing as well as expected engineering challenges can be traced to legacy
issues and also to the imperatives of the ongoing reforms.
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Mandates and Objectives of NERC
The principal objectives of NERC as enshrined in the EPSR Act (2005)
include amongst others:
• To create, promote, and preserve efficient industry and market
structures, and to ensure the optimal utilization of resources for the
provision of electricity services;
• To maximize access to electricity services, by promoting and facilitating
consumer connections to distribution systems in both rural and urban
areas;
• To ensure that an adequate supply of electricity is available to
consumers;
• To ensure that the prices charged by licensees are sufficient to allow
the licensees to finance their activities and to allow for reasonable
earnings for efficient operation;
• To ensure the safety, security, reliability, and quality of service in the
production and delivery of electricity to consumers;
• To ensure that regulation is fair and balanced for licensees, consumers,
investors and others stakeholders;
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How NERC is Realizing its OBJECTS
 NERC is tackling the underlisted broad key regulatory issues:
– Adequacy, reliability and security of electricity supply;
– Development of a competitive wholesale and retail
electricity market (where the private sector will be the key
driver);
– Establishment of a pricing mechanism that will provide
incentives to investors as well as protect consumers;
– Ensuring a level playing field to all operators, both new and
old as well as ensuring open access to transmission and
distribution facilities;
– Monitoring of quality of service to ensure that consumers
get value for their money;
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NERC’s Technical Regulatory
Responsibilities
• Section 96 of the EPSR Act of 2005 empowers
the Commission to make regulations
prescribing all matters (including technical
matters) which are required to be prescribed
for carrying out its objectives and functions.
• The Commission has developed technical
codes and regulations to successfully carry out
it’s functions and responsibilities effectively.
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Work Done on Technical Regulation and
Monitoring (Regulatory Instruments)
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• The following technical codes and standards have
been developed by the Commission:
– Grid Code (undergoing review)
– Distribution Code (undergoing review)
– Metering Code (version2 just approved)
– Health and Safety Standards Manual and Code
– Nigerian Electricity Supply and Installation
Standards (NESIS) Regulation (Draft submitted to
the Commission for approval)
• They were designed in line with international
standards.
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Work Done on Technical Regulation and Monitoring
(Regulatory Instruments) Cont’d...
Technical Codes
• Grid Code: Grid Code contains the day to day operating
procedures and principles governing the development,
maintenance and operations of an effective, well
coordinated and economic transmission system for the
electricity sector in Nigeria. In a nutshell, one can say
that the Grid Code is the operating standards for the
transmission system.
• Distribution Code: It contains the day to day operating
procedures and principles governing the development,
operation and maintenance of an effective, well
coordinated and economic distribution system.
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Work Done on Technical Regulation and Monitoring
(Regulatory Instruments) Cont’d...
Technical Codes
• Metering Code: It contains the day to day operating
procedures and standards to ensure that modern
accurate
metering
systems
with
reliable
communication facilities are deployed across the
industry’s production and supply chains to measure
and record energy production, transportation and
utilization.
• Nigerian Electricity Supply & Installation Standards
(NESIS): The Commission has embarked on the review
of CAP 106 Regulations and the development of the
NESIS that covers generation, transmission, distribution
and utilization. A multi-professional committee has just
completed work on it and submitted a report to the
Commission for further regulatory actions.
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Work Done on Technical Regulation and Monitoring
(Regulatory Instruments) Cont’d...
Technical Codes
• Health & Safety:
Safety in the electricity sector is the responsibility of
every one that produces, transports, supply and uses
electricity. Every operator and user of electricity needs
to handle electricity in such a way that the safety of
persons and equipment is ensured. The Commission
has developed a world class Health and Safety
Standards Manual (which has been codified and
approved) to ensure the optimal provision of health &
safety in the power industry in Nigeria.
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Work Done on Technical Regulation and Monitoring
(Regulatory Instruments) Cont’d...
Technical Codes
• The
Commission
is
keenly
monitoring
the
implementation of the health & safety standards manual
and conducts performance reviews on quarterly basis to
ensure compliance with set standards.
• The Commission also conducts accident investigations
and direct the implementation of appropriate
recommendations on identified gaps/lapses to forestall
future occurrence.
• In addition, we participate in consumer education and
enlightenment on health and safety issues through
Power Consumer Assemblies (PCAs).
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Work Done on Technical Regulation and
Monitoring (Regulatory Instruments)
Regulations
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• The following regulations and guidelines have been drafted and
are operational:
– Regulation on Embedded Generation;
– Regulation on Independent Electricity Distribution Networks
(IEDN);
– Regulation on Independent Transmission Networks (IETN);
– Regulation on Captive Power Generation;
– Guidelines on De-rated Power Plants;
– Guidelines for the Registration of Metering Service Providers;
– Regulation on Regulatory Compliance Reporting;
– Regulations on Methodology for Estimated Billing;
– Regulation on Acquisition of Land and Access Rights for
Electricity Projects; Electricity on Demand
Work Done on Technical Regulation and
Monitoring (Regulatory Instruments)
Regulations
• The following Regulations are undergoing development and
are in varying degrees of completion:
– Regulation on Smart Metering Standards;
– Regulation on Smart Grid Standards;
– Regulation on Geographic Information System (GIS) for
Regulated Assets;
– Regulation on Electric Fencing;
– Regulation on Vegetation Control;
– Regulation on Electric Power System Construction Safety;
– Regulation on the Registration of Electrical Contractors;
– Regulation on the Registration of Meter & Instruments
Testing & Calibration Stations.
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Technical Regulation/Monitoring Challenges
• Generation:
– LOW GENERATION CAPACITY: currently, there is low generation capacity
level in the NESI. The Peak generation to date is 4,517.62MW as at
23/12/2012 for a country of more than 160 million people.
– GENERATION ARCHITECTURE: Overdependence on Central Plant
Generation Model mostly connected to the National Grid.
– FUEL MIX: Lack of adequate fuel mix diversity – overdependence on gasfired power plants (about 85% gas plants and 15% hydropower).
– CONCENTRATION OF GENERATION ASSETS: New power plants mostly
sited in vulnerable Niger Delta Region – also face fuel availability and
power transmission evacuation constraints;
– INADEQUATE CAPACITY GROWTH: there is very slow capacity additions in
generation, transmission and distribution leading to inadequate capacity
growth principally due to the following:
• Poor Planning for system capacity expansion to meet demand
• Long lead delivery times of Central Plants (Thermal and Hydro)
• Long lead delivery of networks expansion and re-enforcement
projects (transmission and distribution)
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Technical Regulation/Monitoring Challenges
• Network Grid Constraints:
– Poor System Expansion Planning;
– Radial and unreliable transmission system resulting to over centralized
and inflexible transmission network architecture;
– Inadequate Transformation Capacity at both transmission and
distribution levels;
– Inadequate Metering and Communication infrastructure at the
national grid level;
– High Transmission System Losses (over 13%);
– Fragile System Security with low or no redundancies;
– Poor Networks Reliability and Power Quality;
– Poor Asset Management, Maintenance & Operations;
– Inadequate Monitoring Tools ( e.g. Supervisory Control And Data
Acquisition - SCADA).
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Technical Regulation/Monitoring Challenges
• Health and Safety Constraints:
– Before passage of the EPSR Act 2005; Health & Safety Standards
were:
Not uniform; Not reflective of Best Practices based on
International Standards; Not evenly enforced;
Not consistently adopted throughout Generation, Distribution
and Transmission Sub-sectors;
Operators’ disregard to existing Health & Safety Standards
Poor safety practices by operators (risk analysis, record keeping,
personnel training and analytics)
Frequent accidents resulting in fatalities and Injuries
Public disregard for existing Safety standards (Encroachment of
Public on Networks Right of Way)
Likely making the sector inefficient and more costly
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Way Forward
Generation:
• Implementation of the Embedded Generation Regulation to increase
generation capacity in the short term;
• Licensing of potential IPPs (Routing Evaluation of Applications);
• Development of Framework for utilizing excess generation capacity;
• Coordination of generation availability and adequacy reports by the
System Operator and Market Operator;
• Generation resources mapping and resolution of fuel supply challenges:
Gas Availability, Quality and Reliability Issues, Coal and other Fuel Sources;
• Compliance Monitoring: Grid Code, Metering Code, Health & Safety Code
and other Regulations to ensure compliance with standards in generation;
• Inspections, testing and certifications of new and modified generation
projects to ensure Quality Assurance (QA) and facilitate early completion
(to commence soon);
• Review, approval and monitoring of Maintenance / Outage Plan for Power
Plants through the System Operator;
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Way Forward Cont’d...
Transmission:
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Closing of the outstanding grid metering gaps and quick resolution of Issues;
Ensure the development of a robust short, medium and long term System
Expansion Plan by the System Operator;
Ensure that accurate Load Demand Projection is conducted by the System
Operator;
Address the transmission system reliability, quality and availability issues;
Make sure there is a well articulated, coordinated and executable Maintenance /
outage Plan for the power system;
Ensure reduction of System Collapses by addressing the major causes such as
vegetation control, protection coordination, adequacy etc.
Ensure that the System Operator procures adequate Ancillary Services from
Generators to provide system security, reliability, quality and stability;
Inspections, testing and certifications of new and modified transmission projects
to ensure Quality Assurance (QA) and facilitate early completion (to commence
soon);
Compliance Monitoring: Grid Code, Metering Code, Health & Safety Code and
other Regulations to ensure compliance with standards in transmission;
Licensing (Routing Evaluation of Applications for transmission licences)
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Way forward Cont’d...
Distribution:
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Ensure the Metering of all inter-Disco Boundaries and Consumers by the Discos;
Ensure the development of robust short, medium and long term distribution
Systems Expansion Plans and Studies by the Discos;
Address the distribution system reliability, quality and availability issues;
Encourage & support the Discos to embark on Embedded Generation to mitigate
against the gap in the electricity supply and availability in a short term;
Make sure there is a well articulated, coordinated and executable load shedding
plan by the Discos;
Ensure reduction of the frequent customer black-outs due to the ineffectiveness of
the Discos;
Inspections, testing and certifications of new and modified distribution projects to
ensure Quality Assurance (QA) and facilitate early completion (to commence
soon);
Compliance Monitoring: Distribution Code, Metering Code, Health & Safety Code
and other Regulations to ensure compliance with standards in distribution;
Licensing (Routing Evaluation of Applications for distribution licences)
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Health & Safety:
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Way Forward
Enforce the implementation of the Health & Safety Code;
Validate the accuracy of HSE statistics/indicators and establish baseline figures; Set
achievable targets and monitor performance (quarterly health & safety Managers
meetings to review performances);
Produce quarterly and annual Industry Health & Safety Performance Reports;
Establish a Penalty/Reward system/ compensation scheme for electrical accident
victims;
Conclude the partnership arrangement with MiOSHA, NEMA, and other Agencies
to promote safety in the NESI through exchanges, trainings and other capacity
development programs;
Conduct Safety Inspections to ensure safety assurance of facilities and personnel
(ongoing);
Demand licensees to conduct safety audits of their facilities.
Conduct Workshops on the newly approved Health & Safety Code across the
country.
Procurement of Test and Monitoring Equipment to monitor health and safety
compliance with statutory limits for emissions , noise etc.
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Other Areas of Interest
– Stranded generation capacities due to:
• gas supply issues such as vandalism, inadequate supply by producers etc. The
Commission is now working closely with the Petroleum Sector to mitigate the gas
supply constraints through ensuring adequate commercial framework;
• transmission evacuation capacity constraints. The Commission is facilitating the
early completion of several ongoing transmission projects and encouraging private
funding arrangement for the transmission;
– There is need for the price of gas to power to be reviewed to a
reasonable level to attract the required investment in the gas sector to
ensure availability, quality of supply of gas to the power plants;
– The passage of the Petroleum Industry Bill (PIB) still pending with the
national assembly. It’s early passage is expected to bring about
positive changes to gas subsector and impact on the power sector.
The Commission is supporting the early passage of this Bill.
– We anticipate significant improvement in generation capacity through
the embedded generation in the short term.
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Conclusion
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The key role of the Commission is to facilitate the orderly reform and development
of a competitive power sector that will ensure adequate supply of affordable, safe,
secure and reliable electricity in Nigeria;
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Going forward the Commission has been addressing these challenges through
several regulatory interventions;
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The Commission expects new issues and challenges to constantly crop up in the
pursuit of it’s mandates and is always forward looking to address such challenges;
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The industry is fast evolving and a lot of the challenges will mainly arise from the
inadequacies of the system; Research is a vital tool.
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Manpower development in the sector is another critical success factor.
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There is need to build confidence and hope in the emerging electricity market and
manage expectations;
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An open and transparent consultative process in addressing issues and challenges
is vital;
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NESI is gradually on the path to sustainable development.
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THANK YOU
Contact us at:
Adamawa Plaza, Plot 1099 First Avenue,
Off Shehu Shagari Way,
Central Business District,
Abuja
Website: www.nercng.org
Email: [email protected]

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