Shocker: Inside Kenya Power's planned electricity price hike

Your power bill is set to substantially go up beginning April 1 should a tariff review application made by Kenya Power go through as proposed.

In the proposals to the Energy and Petroleum Regulatory Authority (Epra), Kenya Power has asked for an increase of between 72 per cent and 83 per cent in the cost of electricity for households and industries, compared to the tariff that Epra gazetted in January last year.

The new round of power price hikes follows recent increases after the lapsing of the electricity tariff gazetted in January last year that saw power prices reduce by 15 per cent.

It will also come at a time when Kenyans have been hit hard by the cost of basic commodities, particularly food items and energy.

At the same time, Kenya Power has proposed lowering the threshold for the Domestic Lifeline category to cover consumers using only 30 units of electricity per month from the current 100 units. The category is targeted at low income households and is highly subsidised.

It has also proposed similar threshold for micro enterprises, categorised as Small Commercial, which are also subsidised in an attempt to enable them grow.

In asking Epra to lower the threshold, Kenya Power said many beneficiaries are not the target for this category, which should benefit low income earners.

“There is a proposal to revise the life-line consumption band for both Small Commercial and Domestic Customers from the current 100kWh per month to 30 kWh per month," said Kenya Power in the application, which Epra is now subjecting to public participation scheduled in major towns between January 31 and February 8.

"This will align the objectives of the lifeline tariff customer category with the correct social class normally defined by the level of income.”

In its proposals, the firm wants the tariff for lifeline customers to go up to Sh14 per kilowatt hour (KWh), which is the cost of energy before taxes and levies are loaded.

Taxes and levies currently stand at about Sh12 per unit and if the proposal sails as it is, it would push the cost of a unit of power for the lifeline category to about Sh26 up from Sh20.

Domestic Lifeline consumers have been paying Sh7.70 per unit under the tariff that Epra published in January last year that reduced power prices by about 15 per cent. Before then, they had been paying Sh10 per unit.

Ordinary domestic consumers will see their power prices increase to Sh21.68 (also before taxes and levies are loaded), a 72 per cent increase from the Sh12.60 per unit in the tariff that was published last January.

The proposed tariff is 37 per cent higher than the Sh15.8 per unit under the 2018-19 tariff. Once taxes and levies are factored, such a household would buy a unit of electricity at about Sh35, up from Sh26 currently.

Power costs for industries will also go up, with companies that fall under the Commercial and Industrial One (CI1) category set to see the per unit cost of electricity go up to Sh16.48 a 90 per cent increase compared to Sh8.70 per unit they paid under the tariff published January last year.

In the earlier tariff of 2018, this category of consumers paid Sh12 per unit.

Customers under the Commercial and Industrial Five (CI5) will pay Sh13.90 up from Sh7.60 per unit under last year’s tariff.

In the 2018 tariff, these firms, which are a handful but the largest power consumers metred at 132KV, were paying Sh10.1 per unit.

“The proposed revenue requirement aims to address the following objectives – meet power purchase costs obligation for existing and committed additional power generation plants… enable continuous system expansion, refurbishment and improvement to provide quality and reliable power, support government objective of universal electricity access,” said Kenya Power in the application, adding that it would also enable power sector players meet increased transmission and distribution costs.

The company has proposed the introduction of two new categories of commercial customers, CI6 and CI7 “to cater for customers metered at 200kV and customers in Olkaria-Kedong Special Economic Zone”. These will pay Sh12 per unit.

Kenya Power has also proposed the introduction of an E-Mobility customer category for electric vehicle charging infrastructure, which is gaining traction in the country.

This category of consumers will pay Sh17 per unit of electricity they consume.

The proposals to increase power costs come even as consumers grapple with the recent hikes in electricity prices occasioned by high cost of fuel and the weakening of the shilling.

Over the last few months, Epra has increased fuel, forex and inflation adjustment costs to cushion power sector players from high oil prices, the weak shilling and the general increase in the cost of doing business in the country.

Epra is legally empowered to change the fuel and forex adjustments every month and the inflation adjustment every six months based on prevailing conditions.

These hikes saw power prices go up in September for the first time last year and eroded the 15 per cent reduction that had been in place between January and August.

The fuel cost charge – which is used to compensate thermal power producers for the heavy fuel oil they use to generate electricity – has gone up to Sh7.18 per unit this year from Sh4.63 between January and August last year.

The foreign exchange rate fluctuation adjustment, which cushions power sector players against a weak local currency when servicing loans advanced in foreign currency, has jumped to Sh1.93 per unit from 73 cents in August.

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