CHAPTER ONE

1.0 INTRODUCTION
1.1 Background of the study
Energy and Power are known to be fundamental concepts in the realm of
Physics, and understanding their relationship with electricity is crucial
for harnessing and utilizing electrical energy efficiently.
Energy refers to the capacity or ability to do work, which is often
measured in joules(J). It can take various forms, including: kinetic
energy (the energy in motion), Potential energy (stored energy, such as
gravitational or elastic energy), Thermal energy (the energy of heat),
Electrical energy (the energy associated with the movement of charged
particles, like electrons), Chemical energy (the energy stored in chemical
bonds). Power on the other hand, is the rate at which energy is
transferred or converted, measured in watts(W). It represents the amount
of energy transferred per unit time.
Energy is like a water tank filled with water, while power is like the flow
rate of water from the tank. The amount of water in the tank represents
the total energy available, while the flow rate determines how quickly
the water is used.
The relationship between energy and power is expressed as:
Power(P) = Energy(E) / Time(t)
Or
E=Pxt
This equation indicates that power is the rate of energy transfer, and the
total energy transferred is the product of power and time.
According to the law of conservation of Energy, energy cannot be
created or destroyed, only converted from one form to another. This
fundamental principle is essential for understanding various energy
related phenomenal, from the motion of objects to the functioning of
electronics devices.
Energy is the backbone of modern society, powering everything from
homes and businesses to transportation and industries. It is a
fundamental component in the daily life of people in the society and its
significance cannot be overlooked. Energy comes in various forms,
each with its unique characteristics and applications. Some of the most
common forms of energy include:
The energy of motion associated with the movement of objects and its
known as Mechanical energy, Thermal energy use for heating, cooling
and power generation, Radiant energy (energy of electromagnetic
waves, including light and radio waves), Renewable energy (energy
from natural sources, such as solar, wind, hydro and geothermal),
Chemical energy, Nuclear energy, Electrical energy (the energy of
moving electrons used for power generation, transmission, and
utilization). Energy plays an important role in driving human progress.
1.2 THE GENERATION OF ELECTRICITY IN NIGERIA
Electricity in Nigeria is generated through thermal and hydropower
sources. The primary source of electricity generation comes from fossil
fuels, especially gas, which accounts for 86% of the capacity in Nigeria,
with the remainder generated from hydropower sources. Before the
beginning of the Fourth Nigerian Republic, power generation was
mainly the federal government’s responsibility through NEPA. But
reforms started in 2005 with the Electric Power Sector Reform Act
(EPSRA) signing opened up the industry to private investors. In 2010,
the Nigerian Bulk Electricity Trading Plc (NBET) was established as a
credible off-taker of electric power generation companies.in 2014, the
sector was privatized with three groups having responsibility of
providing power. By November 2013, the privatization of all generation
and 11 distribution companies was completed, with the Federal
Government retaining the ownership of the transmission company.
The electricity sector in Nigeria generates, transmits and distributes
megawatts (MW) of electric power that is significantly less than what is
needed to meet basic household and industrial needs. Nigeria has
twenty-three (23) power-generating plants connected to the national grid
with the capacity to generate 11,165.4 MW of electricity. These plants
are managed by generation companies (GENCOs), independent power
providers, and Niger Delta Holding Company. In 2012, the industry
labored to distribute 5,000MW, very much less than the 40,000MW
needed to sustain the basic needs of the population. This deficit is also
exacerbated by unannounced load shedding, partial and total system
collapse and power failure. To meet demand, many households and
businesses resort to purchasing generating sets to power their properties,
this source of energy provided 6,000 MW in 2008. Nigeria has a chronic
electricity shortage that has affected the country for many years. In
2022, its power grid collapsed twice in one week.

1.3 HISTORICAL BACKGROUND OF DISTRIBUTION

COMPANIES IN NIGERIA
In 1886, electricity generation in Nigeria began in Lagos, with the use
of generators providing 60kW of power. In 1923, tin miners installed a
2MW plant on the Kwali river which was located at the Federal Capital
Territory Nigeria. In the same year, the Nigeria electricity supply
company was established near Jos to manage a hydroelectrical plant at
KURA, powering the mining industry. The united Africa company
established another private enterprise in sapele to power the activities of
African Timber and plywood company. Between 1886 and 1945, electric
power generation remained relatively to, primarily serving Lagos and
other commercial centers like Jos and Enugu.
The colonial government created an electricity department within the
Public Works Department, installing generating sets in various cities to
serve government areas and commercial centers. In 1950, the Legislative
Council of Nigeria began moves to integrate the electricity industry
when it enacted a law to establish the Electricity Corporation of Nigeria
(ECN) with the duties of developing and supplying electricity. ECN took
over the electricity sector activities within PWD and the generating sets
of Native Authorities. In 1951, the firm managed 46MW of electricity.
Between 1952 and 1960, the firm established coal-powered turbines at
Oji and Ijora, Lagos. It began making preliminary plans for a
transmission network to link the power-generating sites with other
commercial centers.

SOURCE OF DATA
The Electricity distribution companies (DISCOs) data was used to
analyze the effect of unmetered customers and energy supplied on
revenue collected in Abuja, Kano, Port Harcourt, Enugu, Ibadan and
Ikeja, from the year 2020-2022

AIMS & OBJECTIVE

• This project aims to investigate the relationship between
unmetered customers, energy supplied (GWh) and revenue
collected.
• To hypothesize that unmetered customers and the amount of
energy supplied can impact the revenue collected by energy
providers.
• To analyze the data on the number of unmetered customers, the
GWh of energy supplied and the revenue collected over a specified
period of time
STATEMENT OF PROBLEM
The efficient and accurate collection of revenue is important for the
sustainability and effectiveness of electrical distribution companies.
However, the presence of unmetered customers and fluctuations in
energy supplied (measured in GWh) pose significant challenges to
revenue collection processes. Therefore, the problem statement for this
study is to investigate the relationship between unmetered customers,
energy supplied (GWh), and revenue collection by electricity
distribution companies. The study seeks to address few question one
which is: what are the implications of unmetered customers and
fluctuating energy supply on revenue collection efficiency.

SIGNIFICANCE OF STUDY
• The issue of unmetered customers is part of a larger problem with
electricity in Nigeria, which has been plagued by underinvestment,
inefficiency, and corruption. It can create a negative public
perception of the electricity sector, which can make it more
difficult for energy distribution companies to attract investment
and grow their business.
• Unmetered customers can have a significant impact on the amount
of energy supplied by electricity distribution companies in Nigeria.
Because they pay a flat rate for electricity, they may not have the
incentives to conserve energy or to use it efficiently. This can lead
to overconsumption, which strains the electrical grid amd reduce
the amount of energy available for other customers.
• The lack of reliable metering can make it difficult for energy
distribution company to forecast demands accurately, which can
result in shortages or oversupply.
DEFINITION OF TERMS
UNMETERED CUSTOMERS:
ENERGY SUPPLIED(GWh): this is a direct measure of the
amount of electricity delivered to customers. Higher GWh should
translate to higher revenue assuming accurate billing.
REVENUE COST: also known as the Tariff structure is the price
per unit of electricity (kWh) significantly impacts revenue.
DISCOs may raise Tariffs to compensate fir revenue losses from
unmetered customers.
 CHAPTER TWO
2.0 LITERATURE REVIEW
Unmetered customers are major challenge for Distribution companies(DISCOs)
around the world. They represent a gap in accurate billing and revenue collection,
impacting the financial health of these companies and ultimately hindering
investment in grid infrastructure and service improvements. Since their
consumption isn’t directly measured, estimated billing is used. This can be
inaccurate, leading to revenue loss for DISCOs if customers are underbilled or
customer dissatisfaction if they are overbilled.

Research is a systematic and structured way of gathering, and analyzing

information to answer specific questions, test hypothesis or explore a
topic