Kenyans to pay more for electricity as ERC raises levies

Deputy President William Ruto looks on as 59 year old Ruth and her 87 year husband Jemiron Langat light up their home in Chepng'osos village in Kericho County on 18th June, 2017. Mr Ruto said the government's programme of connecting all schools to electricity is nearing completion and are extending to households under the last mile connectivity project. The government aims to connect 70% of Kenyans to the national grid by 2017. PICTURE REBECCA NDUKU/DPPS

Kenyans should expect a steep rise in their electricity bills starting this month after an upward revision of the components making up the power bill.

The Energy Regulatory Commission yesterday increased the Fuel Cost Charge and the Inflation Adjustment. The rise has been due to biting drought that has seen reduced power production from hydro plants and the switching on of costly thermal power plants.

Other factors that have resulted in the hike for the January power bills include the expected rise in the cost of living in coming months.

The fuel cost charge, which is the cost of diesel used by thermal plants to produce electricity and passed directly to power consumers, went up to Sh2.93 per unit in January from Sh2.85 in December.

“Notice is given that all prices for electrical energy... will be liable to a fuel cost charge of plus cents 293 per kWh for all meter readings to be taken in January, 2017,” said the energy industry regulator in a gazette notice yesterday.

The fuel cost is expected to further go up in February as the dry weather persists. Water levels at the Seven Folks Dam has substantially gone down, reducing the contribution of the power station along the hydroelectricity system.

REVISED UPWARDS

The hydro power stations at the Seven Folks contribute about 45 per cent of the power consumed in the country but this had gone down to 35 per cent two weeks ago. The Ministry of Energy warned that this could further go down to 28 per cent. Thermal plants on the other hand contribute 11 per cent of the power consumed but this has gone up to 18 per cent.

Energy and Petroleum Cabinet Secretary Charles Keter said this could go up to 24 per cent. The resultant increase would see the fuel cost charge reach a high of Sh3.52. ERC also revised upwards the Inflation Adjustment for the half year between January and June this year to Sh0.36, compared to Sh0.29 in the half to December 2016.

The Inflation Adjustment is a component on the electricity bill, which cushions players in the power sector against sharp rises in the cost of doing business. It is adjusted half yearly in line with domestic and international inflation on cost of supply.

While inflation has over the last year been within the Government’s short term target of between 2.5 per cent and 7.5 per cent, factors such as the drought that might push up food prices and rise in the cost of oil might see inflation go up in the coming months.

ERC also increased the Water Resource Management (WARMA) levy to Sh2.5 per unit from Sh2.18 in December. The levy is paid for water used in generation of electricity and passed on to WARMA.

The forex adjustment, which goes up or down depending on the performance of the shilling against other currencies, however went down to Sh0.75 from Sh0.91 in December. It helps cushion electricity industry players from a weak shilling especially when making repayments for loans denominated in foreign currency, mostly the US dollar.

 

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