Why Kenyans should brace for higher electricity bills this month

The cost of electricity will go up for the second month in a row in October as Kenya increases reliance on power generated from thermal power plants, as well as imports from neighbouring countries, to avert power rationing.

This is after production from renewable energy sources failed to keep up with local consumption.

The Energy and Petroleum Regulatory Authority (Epra) has increased the fuel and foreign exchange components of the power bill following increased dependence on costly thermal electricity-generating plants as well as more imports from Ethiopia and Uganda.

Epra, in a public notice, increased the fuel cost charge to Sh3.69 per unit of electricity that will be consumed in October, a marginal hike from Sh3.60 per unit in September.

It nearly doubled the foreign exchange rate fluctuation adjustment to Sh1.53 per unit in October from 80.67 cents in September.

Epra notified consumers "that all prices for electrical energy... will be liable to a fuel energy cost charge of plus 369 Kenya cents per kilowatt hour for all meter readings to be taken in October, 2025."

Fuel cost charge 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.

Power prices had been on the decline since the beginning of 2024 on account of reducing reliance on thermal power plants, the stabilisation of the shilling, and an improved hydrology at the hydropower dams.

The general decline has been marked by marginal spikes, with the latest being in April 2024.

FCC, which compensates thermal power plant owners for fuel purchases, dropped to Sh2.99 per kWh in August from a high of Sh4.14 in April this year.

Use of thermal electricity has been on the rise as the country increases output from these plants to bridge the difference between consumption and production by local renewable power plants.

Ferfa, a pass-through that cushions power sector players from volatility in the exchange rate, has this year peaked at Sh1.77 per unit in July before dropping to 81 cents in September, but is now on the rise again to Sh1.53 this month. Higher foreign exchange costs are due to higher imports from Ethiopia and Uganda, which Kenya is using to plug the deficits in power production locally.

The forex adjustment also shields the industry from forex volatility when repaying foreign currency-denominated loans, as well as when Kenya Power pays some of the power producers whose power purchase agreements are denominated in foreign currency.

The increased reliance on thermal power plants has been on the rise this year, accounting for 10.79 per cent of the power produced in the country over the seven months to July this year.

The share of thermal power sources over a similar period to July in 2024 stood at 8.67 per cent, according to data by the Kenya National Bureau of Statistics (KNBS).

In a recent report, Epra said the amount of power sourced from thermal energy sources grew 18.5 per cent to 1,335.62 GWh (gigawatt hours) of energy in the year to June 2025 compared to the 1,127.11 GWh generated in the year to June 2024, which it attributed to higher demand at peak hours.

Power imports, the report showed, have been on the rise and accounted for 10.66 per cent of the total energy generated for use in Kenya.