Consumers to pay more for electricity as Kenya Power moves to recover backdated Sh10billion fuel costs
By Paul Wafula
| January 5th 2018
Electricity bills are set to rise as Kenya Power moves to recover more than Sh10 billion deferred in fuel costs last year.
The company says it under-charged consumers last year by not passing on the full costs it incurred on fuel.
The costs followed the power firm's decision to switch on expensive diesel generators to bridge deficits occasioned by a prolonged drought.
Kenya Power delayed the passing on of costs to consumers in line with a silent Government policy implemented last year on many basic commodities during the electioneering period.
The power distributor disclosed the impact of the drought in cost of power in its annual report shows Sh10.1 billion as recoverable fuel costs.
The company says it started the recovery in October and has already collected about Sh2 billion. It wants to recover the remaining amount in the coming months.
“Recoverable fuel costs relate to fuel costs for the month of June to be recovered in July and unrecovered fuel costs, from customers currently in a mitigation fund set up by the Energy Regulatory Commission (ERC), to be passed on at a later date upon approval,” Kenya Power said in a note in the report for the year ending June 30, 2017.
This means consumers should brace themselves for bigger fuel charges going forward.
The company says fuel costs increased by Sh9.4 billion to hit Sh22.4 billion due to increased usage of thermal sources during the year. This represents a 76 per cent jump, one of the highest increases in fuel costs in the last decade.
The units generated from thermal plants increased by 66.9 per cent, from 1,297GWh the previous year to 2,165GWh, the report says.
Kenya Power said it recognised fuel cost recoveries as the actual amounts consumed by customers and billable to recover the fuel cost.
The biggest beneficiaries will be the diesel generators, who are always on standby in case of electricity outages.
But the implementation of this policy may leave some consumers worse off, especially those in rental houses, given they may be forced to pay bills for previous tenants.
The standard practice over the years, has been to pass on incurred fuel cost charge to consumers the following month. It is not clear, therefore, why ERC decided to backdate this bill to be incurred by consumers at a later date.
During the electioneering period, the Government moved to cushion consumers from the rise in the cost of living mainly driven by drought.
This saw the removal of taxes on maize, milk and sugar imports, and fixed a 2kg packet of maize flour at Sh90.
But the subsidies appear to be coming to an end now that elections are over, and consumers can expect to be hit by the actual cost of these products.
In the run-up to the polls, Government froze the fuel cost levy at Sh2.85 per kilowatt hour (kWh) over the four months to June, shielding consumers from paying the full cost of the thermal generators.
But the freeze was lifted in September, allowing Kenya Power room to recover the costs from its consumers. This saw the fuel cost charge shoot sharply to Sh4.35 per unit in December, the highest in 36 months.
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