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Confusion reigns over proposed hike in power tariffs

BUSINESS
By - | August 29th 2012

By Edward Macharia

There is confusion which way electricity bills will go this month. This follows denial by Kenya Power that it plans to increase power charges. Joseph Njoroge, managing director, Kenya Power, said there are no plans for tariff reviews.

The denial by Njoroge is despite an August 24 Legal Notice in the Kenya Gazette that said Kenya Power planned to increase the foreign exchange rate fluctuation adjustment from 76 cents to Sh2.80 and the fuel cost charge by 27 cents to Sh5.66 per unit.

 “There is no tariff review anticipation that we have made. I am not aware of any tariff review that has been made,” said Njoroge.

Exchange rate

Njoroge admitted that the shilling exchange rate has been stable, but pointed out that the monthly fluctuations in forex component in power bills is determined by KenGen and Kenya Power’s debt obligations.

Njoroge spoke yesterday in Nairobi at a media briefing where Energy Permanent Secretary Patrick Nyoike was present.

The power firm usually passes on costs accrued due to rise on fuel prices as well as instability in the local currency to consumers. A proportion of local electricity supply is generated using diesel. This proportion usually goes up during droughts.

The August 24 legal notice comes when the long rains are just subsiding. The heavy rains experienced in the three months to July were supposed to see the shift in electricity production, with the bulk of power coming from hydro sources.

During rainy seasons, electricity production using hydro sources usually goes up, and can account for close to 70 per cent of the power consumed.

Higher costs

This would mean Kenya Power purchases reduced amounts of electricity generated by Independent Power Producers that use the more costly diesel to generate electricity.

In may, Kenya Power Kenya power had announced a decline in electricity tariffs.

It  promised consumer further reprieve in the following months when hydro generated electricity was expected to take the lion’s share of the electricity consumed and reduced power purchase from thermal electricity producers.

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