Why you are paying higher power bills

Electric power meter measuring power usage. Watt hour electric meter measurement tool.

Electricity consumers are contending with higher bills partly due to the depreciation of the shilling against the US dollar over the recent months.

The slide in the local currency has resulted in a rise in the foreign exchange adjustment component of the power bill that credited to the latest rise.

The Shilling has since June been weakening against the greenback and had by the end of July, sunk to the lowest level in five years to Sh104.3 per dollar. While it has made a slight recovery, the local unit is still trading at lower levels of Sh103.8 as of yesterday, according to Central Bank data.

This is low compared to the Sh101 levels it had been trading at over the first half of the year.

Also a major threat that may rally the current energy cost is the recent rise in crude prices following an attack on Saudi Arabia oil field that drove up prices over the weekend.

The foreign exchange fluctuation adjustment component on the power bill is a cost that cushions power sector players from currency volatility when incurring costs denominated in foreign currency such as loan repayments, a substantial chunk of them in dollars.

The forex adjustment has shot up to 22 cents per unit of power consumed in August and 21.36 cents in September, from five cents in July this year.

It is the highest level since July last year and also negates credits that consumers have enjoyed for most months since August last year.

“Notice is given that all the prices for electrical energy… will be liable to a foreign exchange fluctuation of plus 21.36 cents per kilowatt-hour (KWh) for all meter readings to be taken on September 2019,” said Energy and Petroleum Regulatory Authority (EPRA) in the notice.

EPRA reviews the forex adjustment component monthly, and in a Friday Kenya Gazette notice, it announced the new rate of 21.36 cents.

The fuel cost charge, the other component that EPRA reviews monthly, however, went down to Sh3.45 per unit in September compared to Sh3.60 per unit in August.

The forex adjustment cost has been in the negative since September last year to June 2019.

This meant consumers were credited with Sh1 billion that had taken free units whenever one bought tokens to compensate users.

This was an overbilling after the power sector players used a higher dollar rate to compute the foreign exchange levy last year.

Loans advanced to power sector firms for infrastructure projects are usually in dollars, Japanese Yen or Euros.