How aged power network, theft keep your bills high
By Macharia Kamau
| Jan 19th 2022 | 4 min read
Rising power bills have been blamed for the high cost of living and uncompetitive pricing of Kenyan products despite reforms made to make the country a regional trade hub.
One of the causes is the huge amount of electricity that is lost in the process of taking it to the consumer.
For every 100 units of electricity that Kenya Power bought from producers last year, 24 of them were lost during transmission and distribution. The company was only able to sell 76 units.
The cost of the units lost is borne by the State and consumers, with the latter shouldering the big burden.Electricity system losses – the difference between what Kenya Power buys from producers and what it sells to consumers – has risen over the years to stand at 23.95 per cent in the year to June 2021, from 18.9 per cent in 2017.
The money translates to billions of shillings lost by the company. For instance, Kenya Power used Sh76.04 billion in buying 9.85 billion units of power in the year to June 2021.
A system loss of 23.95 per cent may have meant that units worth Sh18 billion were lost before they reached the end users.
The Energy and Petroleum Regulatory Authority (Epra) allows the company to recover 19.9 per cent of the system losses from consumers.
Passing the cost of system losses to consumers plays a part in keeping the country’s electricity costs high. Kenya Power has to cater for the losses above 19.9 per cent, which has an impact on its bottom line.
Electricity is also lost through a mix of factors broadly categorised into technical and commercial losses. “System losses eat into our electricity sales thereby affecting our financial performance,” said Kenya Power in its latest annual report.
“They include technical losses, which are inherent in every power system and occur in the transmission and distribution process, and commercial losses arising from meter tampering and bypasses, and other illegal activities on the network.”
Technical losses are estimated at 12 per cent and while dilapidated infrastructure could be to blame, it is difficult to eliminate them.Commercial losses can be dealt with through reforms, industry stakeholders say. They say Kenya Power can bring them down by over 90 per cent over a short period and even possibly eliminate them.
The firm said it has in the recent past put in place measures that are expected to limit system losses, especially commercial losses.
“To further step up the war on energy losses, the company launched a loss reduction initiative dubbed ‘The War Room’ in February 2021 to spearhead system loss reduction initiatives,” said Kenya Power.
“A raft of measures instituted by the War Room team included ensuring timely metering of customers, fast-tracking replacement of faulty meters, targeted inspection of meters to establish their integrity…and preventing electricity theft through meter bypasses and illegal connections.”
Kenya Power said the War Room team employs data analytics to map out hotspots for the pilferage to reduce losses.
It said there has been huge progress through the measures instituted by the War Room, with system losses going down to 22.7 per cent over the second half of the year to June 2021 compared to 25.21 per cent over the first half of the financial year.
Informal settlements are among the major hotspots where the company is barely making any sales, with the trade dominated by cartels.
“It is estimated that the company loses about 80 per cent of the expected revenue due to illegal connections in the informal settlements of Mathare, Mukuru and Kibera,” said Kenya Power.
The firm said it has partnered with community-based organisations to act as ambassadors in the areas and help regularise the connections. This, it notes, would help the company address the issues the consumers in informal settlements have.
While informal settlements are tough to deal with, so are a few large consumers who, at times with the assistance of Kenya Power employees, bypass meters, getting billed for much lower than they consume.
The Presidential Taskforce on Power Purchase Agreements noted the high instances of theft among commercial and industrial customers, and recommended increased surveillance on large customers’ premises.
To reduce commercial losses, the taskforce recommended that Kenya Power reviews the metering policy for large power consumers and ensure all meters are accessible to its staff.
The taskforce also wants Kenya Power to “institute a forensic audit of key commercial consumers to confirm that the power delivered is consistent with the metered power, ensure there is no power leakage…as well as a crackdown on all illegal connections and prosecute offenders including staff and contractors”.
The taskforce is behind the reforms being undertaken within the power sector, including the reduction in cost, which is expected to result in a 30 per cent decline in electricity bills by March this year.
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