NERC Orders Compensation for Band A Customers Affected by Power Supply Shortfalls

The Nigerian Electricity Regulatory Commission (NERC) has approved a compensation scheme for eligible Band A customers affected by electricity supply shortfalls between February and March 2026, following widespread generation constraints that prevented Distribution Companies (DisCos) from meeting committed service levels. 

The Nigerian Electricity Regulatory Commission (NERC) has approved a compensation scheme for eligible Band A customers affected by electricity supply shortfalls between February and March 2026, following widespread generation constraints that prevented Distribution Companies (DisCos) from meeting committed service levels.

The commission disclosed this on Thursday, June 4, in a statement issued on its official X account announcing Directive No. NERC/2026/002 on the Special Compensation of Band A Customers Arising from Grid Generation Constraints.

According to NERC, the compensation covers the period from February 2026 to March 2026, when significant generation shortages across the Nigerian Electricity Supply Industry (NESI) reduced the ability of DisCos to deliver the minimum electricity supply promised to some Band A customers.

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The commission explained that the supply shortfalls were largely caused by inadequate gas supply as well as the vandalism of critical gas and transmission infrastructure, factors that were beyond the direct operational control of electricity distribution companies.

What they are saying 

NERC said the directive was introduced to provide relief to eligible Band A customers who experienced service levels below the minimum threshold guaranteed under the service-based tariff framework.

• Under the directive, feeders that recorded an average daily electricity supply of between 18 and 20 hours during the affected period will continue to be compensated under the existing framework established in Addendum No. NERC/2024/003. The arrangement applies to both Maximum Demand (MD) and Non-Maximum Demand (Non-MD) customers.
• For Band A feeders that recorded less than 18 hours of average daily supply, NERC directed that affected customers be granted special compensation while retaining their Band A classification during the covered period.

The commission stated that eligible Non-MD customers would receive compensation equivalent to 20% of the approved February 2026 energy cap applicable to their feeder, while MD customers would receive compensation equivalent to 20% of the average energy billed per MD customer in February 2026.

• “Affected Band A feeders will not be downgraded during the covered period,” NERC stated.

The commission further noted that “eligible customers will receive special compensation” based on the approved framework designed to address service delivery shortfalls arising from grid generation constraints.

More insights

NERC explained that compensation will be delivered through different mechanisms depending on the customer’s metering category.

• Under the directive, prepaid customers will receive compensation through token credits, which will be loaded directly onto their meters. Postpaid customers, on the other hand, will receive compensation through adjustments to their electricity bills.
• To ensure timely implementation, the commission directed that compensation for February 2026 be completed no later than May 31, 2026, while compensation relating to March 2026 must be concluded by June 30, 2026.

NERC also introduced consumer protection measures to prevent abuse of the process. Distribution companies were expressly prohibited from deducting compensation credits from any outstanding customer debts.

In addition, DisCos must clearly communicate the value of the compensation and the period for which it was granted to all eligible customers.

What you should know 

Under NERC’s service-based tariff framework, electricity consumers are grouped into Bands A to E based on the average number of hours of electricity supplied daily.

• Band A customers are expected to receive a minimum of 20 hours of electricity supply per day. Band B customers are entitled to at least 16 hours daily, while Band C customers are expected to receive a minimum of 12 hours of supply each day. Lower bands receive fewer guaranteed hours of electricity.

The compensation directive is consistent with NERC’s long-standing policy of linking electricity tariffs to service delivery obligations.

• Recall that in October 2020, the commission warned electricity distribution companies that consumers would be compensated where service commitments were not met under the service-reflective tariff regime. At the time, NERC said it had deployed monitoring mechanisms to track compliance by DisCos and verify service delivery levels.

The commission subsequently moved to strengthen enforcement in May 2021 when it announced plans to implement compensation for electricity consumers affected by under-supply of power to their homes and businesses.

The latest directive represents one of the most significant compensation interventions targeted specifically at Band A customers since the introduction of service-based tariffs, reinforcing NERC’s position that consumers should receive relief where promised service levels are not delivered.