Kenyans to pay more for the electricity due to high thermal dependence

Kenya Power and Lighting Company(KPLC) MD and Dr. (Eng.) Joseph Siror when he appeared before the Senate Cohesion at County Hall, Nairobi on April 22, 2024 over Equal representation.[Boniface Okendo, Standard]

The cost of electricity will go up this month after the Energy and Petroleum Regulatory Authority (Epra) increased the fuel cost charge component of the power bill as the country increases dependence on costly thermal electricity plants.

Epra, in a public notice, increased the Fuel Cost Charge (FCC) to Sh3.60 per unit for electricity consumed in September up from Sh2.99 in August.

It however, reduced the cost of Foreign Exchange Rate Fluctuation Adjustment to 80.67 cents per unit in September from Sh1.22 in August, which, however, is not adequate to offset the rise in FCC.

Epra notified consumers "that all prices for electrical energy...will be liable to a fuel energy cost charge of plus Sh3.60 per kilowatt hours (KWh) for all meter readings to be taken in September, 2025."

FCC is a pass-through cost that compensates thermal power producers for the costs incurred in acquiring heavy fuel oil used in electricity generation. The forex charge cushions power sector players from volatility in local currency.

The new rates will reverse the declining trend in the cost of power that has been seen since April this year, where power costs dropped from Sh29.39 to Sh27.7 in August.

The increased reliance on thermal power plants has been on the rise this year, accounting for 11.05 per cent of the power consumed in the country over the six months to June this year.

The share of thermal power sources over the first six months in 2024 stood at 8.54 per cent, according to data by the Kenya National Bureau of Statistics.

The thermal power producers injected 727.16 million KWh into the grid, against 6.58 billion KWh generated by different energy sources over the six months.

The surge in the contribution by thermal was on account of a drop in the electricity produced by hydro power plants, which accounted for 26.1 per cent of power production over the half, a reduction from 30.2 per cent over a similar period last year.

Geothermal remained the largest electricity source in the county, accounting for 44.89 per cent of the power produced in Kenya over the six months, which was also an increase from 43.87 per cent last year.