Electricity bills drop slightly in July reading

Deputy President William Ruto and Energy CS Charles Keter light a bulb to officially commission electricity supply to rural houses at Chebyuk Village in Mt Elgon, Bungoma County

Consumers should expect a marginal drop in the power bills for the month of July following slight reduction in foreign exchange levy and water component of the monthly electricity bill.

In its latest review of some cost components that make up the monthly bills, the Energy Regulatory Commission (ERC) reduced the foreign exchange levy to Sh1.05 per unit of electricity for power consumed in July. This is a marginal drop from Sh1.08 cents per unit in June.

Homes and businesses consume about 800 million kWh of electricity monthly. This means the drop in forex levy by Sh0.03 per unit translates to savings of Sh24 million for consumers.

The forex adjustment, which is pegged on the performance of the shilling against other currencies, serves to cushion electricity industry players from a weak shilling especially when making repayments for loans denominated in foreign currency.

Water Resource Management Authority (WRMA) levy, another cost component, has dropped by 20 per cent from Sh1.57 to Sh1.25 per unit of electricity consumed.

Expensive diesel

However, inflation charge, has increased to Sh0.39 per kWh of power consumed from last month’s Sh0.36. This is to reflect the high rate of inflation that has now stayed outside Central Bank of Kenya rate for the last three months. In May, drought had pushed inflation to 11.7 per cent.

At the same time, fuel cost charge, which is linked to the amount of power generated from expensive diesel, remained at Sh2.85 per kilowatt hour (kWh). This is usually the biggest component in the variable costs outside consumer’s control.

Apart from the four variable costs, consumers also pay ERC levy of 3 cents per kWh, Rural Electrification Project (REP) levy at five per cent of the base rate and 16 per cent Value Added Tax.

ERC Acting Director General Robert Oimeke said in yesterday’s gazette notice that total units generated and purchased, excluding exports in June were 855.3 million kWh. This is a slight drop from last month’s 868.1 million kWh.