Kenyans to get 15 per cent cut in power bills this month
By Dominic Omondi
| Dec 13th 2021 | 3 min read
Kenyans have a reason to smile about after President Uhuru Kenyatta announced a 15 per cent reduction in the cost of electricity starting this month.
This is however less than the 33 per cent he promised in September.
It might also not be a merry Christmas for Kenya Power who will have the arduous task of reducing the number of illegal electricity connections and sealing most of the leakages in their network.
In his last Jamhuri Day Speech at Uhuru Gardens, Nairobi, yesterday, the Head of State said the reduction in power bills was in keeping with a promise his government made to Kenyans to cut the cost of electricity by 30 per cent by the end year, even as he instituted radical changes at the power distributor.
“In honour of this pledge to the nation, and in response to the concerns over the high cost of electricity raised by both individual consumers and enterprises, I am pleased to announce to the nation that the reduction of the cost of electricity will be implemented in two tranches of 15 per cent each,” he said.
With the new plan, the cost of power will go down by 15 per cent from Sh24 per kilowatt to Sh20.4 by end of this month.
This is expected to decline even further by another 15 per cent to Sh16 per unit by end of March next year when the second phase of the reduction will be implemented.
This means that for Sh1,000, which would earn you an average of 41 units in November, consumers will be able to get the same units at Sh850. Alternatively, Sh1,000 will now buy you 50 units (kilowatts).
The first tranche of reduction will be achieved through the reduced system and commercial losses, with consumers expected to absorb less of these losses.
System losses - the difference between the total amount of energy procured and the amount sold, include technical losses in the power lines and commercial losses arising from meter tampering and bypasses, and other illegal activities on the network.
Normally, the power distributor is allowed to pass on to consumers a certain fraction of the system losses, 19.9 per cent. This saw them absorb only Sh3.2 billion losses even as customers were slapped with an additional bill of Sh15.9 billion for electricity theft and leakages from an ageing transmission network.
Before July 2020, sector regulator, the Energy and Petroleum Regulatory Authority (Epra) only allowed Kenya Power to recover 14.9 per cent of the system losses from consumers.
However, with the new changes, it meant that consumers were absorbing virtually all of KPLC’s system losses. In the past five years, the losses have averaged 18.8 per cent.
Now, KPLC will be forced to address the system losses by going after the illegal connection of electricity in the slums of Mathare, Mukuru, and Kibera and cracking down on meter tampering.
Last month, Kenya Power Chairperson Vivienne Yeda said the utility firm would not shoulder the cost of cheap power alone, noting that the loss in revenue due to the reduction in the cost of electricity would be will be shared among the players in the supply chain.
Last September, Mr Kenyatta directed the Ministry of Energy to reduce power tariffs by 33 per cent and not 30 per cent as he noted in his Jamhuri Day speech yesterday.
“We need to reach that figure (Sh16 per kilowatt) without affecting KPLC’s bottom line,” said Yeda last month, noting that KPLC had last year undertaken not to increase the tariff, which left its revenues low.
“Any savings that will be realised to reach the 33 per cent will have to be either in terms of operations or efficiencies within the energy sector.” Mr Kenyatta said the second tranche of reduction in power costs would see the independent power producers (IPPs) also take a hit.
He said the State has initiated engagements with IPPs to renegotiate power purchase pacts and bring down the cost of electricity.
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