Pricing Fairness Perceptions and Customer Loyalty in the Nigerian Electricity Distribution Sector

This study empirically examines the relationship between pricing fairness perceptions and customer loyalty in the Nigerian electricity distribution sector, with evidence from customers of two distribution companies (DISCOs) serving South South Nigeria, specifically Benin Electricity Distribution Company and Port Harcourt Electricity Distribution Company. Pricing fairness, encompassing distributive fairness (outcome equity), procedural fairness (process equity), and interactional fairness (treatment equity), has been demonstrated to significantly influence customer loyalty in utility service contexts internationally. In Nigeria, chronic electricity supply deficits combined with perceived overbilling and opaque tariff structures create severe pricing fairness concerns that undermine customer satisfaction and loyalty. Grounded in equity theory and the tri-component fairness model, the study tests hypothesised relationships between fairness dimensions and attitudinal and behavioural loyalty indicators. A cross-sectional survey of 380 electricity consumers is conducted using systematic sampling across residential and commercial customer categories. Structural equation modelling is employed for analysis. Preliminary findings indicate that distributive fairness (perceived equity between electricity consumed and amounts billed) has the strongest effect on loyalty, while procedural fairness (complaint handling transparency) significantly moderates dissatisfied customer defection. Recommendations are directed at DISCO management, the Nigerian Electricity Regulatory Commission (NERC), and the Federal Ministry of Power on designing tariff communication and billing systems that improve fairness perceptions and build durable customer loyalty. Keywords: pricing fairness, customer loyalty, electricity distribution, DISCO, Nigeria