Weak Shilling set to raise power bill

Expensive energy and power consumption concept. Coins in front of an electricity meter. [Courtesy]

Your power bill for this month will go up due to the weak shilling, which has touched new lows in recent months.

The foreign exchange charge in the power bill has been reviewed upwards to Sh1.31 per unit of power, the highest since April 2018.

The charge cushions power industry players from volatility in the local currency when repaying loans denominated in foreign currency, including the US dollar and Japanese yen.

In December, the forex charge stood at 70 cents per kilowatt hour (kWh), having risen from minus one cent in February last year - which meant consumers would be credited with few free power units whenever they made purchases.

“Notice is given that all prices for electrical energy… will be liable to a foreign exchange fluctuation adjustment of plus 131.66 cents per kWh for all meter readings taken in January 2021,” said the Energy and Petroleum Regulatory Authority (Epra) in a notice in the Kenya Gazette yesterday.

The forex charge dropped sharply in August 2018 when new power tariffs were announced, going down from Sh1.22 in July to five cents, a 95 per cent drop.

But the Shilling has recently weakened against the US dollar. According to Epra, the currency traded at an average of 110.52 to the dollar in December 2020 from Sh100.9 at the beginning of the year.

The charge is among the components in the electricity bill reviewed monthly.

In yesterday’s notice, the fuel cost charge remained largely unchanged at Sh2.58 per unit of electricity for January readings compared to Sh2.56 in December.

The fuel charge is also a pass-through cost which is used to compensate thermal power producers the costs they incur in acquiring fuel, mostly heavy fuel oil.

Thermal power producers are usually engaged when renewable power production sources are not available.

The regulator also retained the inflation charge, which is reviewed every six months and was last reviewed in July 2020, at the same level at 32 cents.

The component cushions power industry players from rise in the cost of supplies and is pegged on the inflation rate.

The inflation rate rose modestly over the six months to 5.62 per cent in December from 4.59 per cent in June.