Costly electricity tariff leaves Kenya Power with Sh35b bills

Kenya Power Company Secretary Imelda Bore (left), CEO Joseph Siror and Chairperson Joy Brenda Masinde. [Jonah Onyango, Standard]

The high cost of living, coupled with the hike in power tariffs last April, has seen many Kenyans default on paying their electricity bills. 

Customers owed Kenya Power Sh35.7 billion for electricity consumed over the year to June 2023.

The debt was an increase from Sh27.3 billion, which Kenya Power noted was due to a mix of factors including the tough economic times as well as the high cost of electricity that followed a new tariff that came into effect on April 1.

This is even as the high cost of power piqued the interest of the Cabinet, which on Monday ordered that power sector agencies increase the use of cheap hydropower following the intense rains and move away from using costly thermal power. 

Kenya Power in its annual report noted that Sh15.89 billion that customers owed over the year to June 2023 was more than three months old.

Another Sh3.66 billion remained unpaid for between 30 and 90 days while Sh16.14 billion was due for less than 30 days.

“Electricity debt increased from Sh27.3 billion to Sh35.69 billion mainly due to an increase in the level of monthly billing from an average of Sh13.59  billion in the first quarter of the year to Sh18.61 billion in the fourth quarter."

The increase was due to the combined effect of the depreciation of the local currency, high fuel processes and the revised tariffs,” said Kenya Power in its annual report

“In addition, the customer payment rate declined mainly due to the prevailing economic conditions. This resulted in the increase of provisions by Sh2.29 billion.”

A substantial amount is owed by various State ministries, departments and agencies (MDAs) as well as the county governments, who according to Kenya Power had not paid Sh3.6 billion for power supplied as of June 2023, or 10.4 per cent of the Sh35.69 billion unpaid during the year. 

The debts by State agencies and county government this year was an increase of 31.8 per cent from Sh2.73 billion in the year to June 2022.

Kenya Power has in the past sought help from both the Ministry of Energy and the National Treasury in the collection of overdue electricity debt from government departments and entities.

The Energy and Petroleum Regulatory Authority (Epra) increased the cost of electricity in April this year. In the new tariff, it narrowed the subsidised lifeline band while increasing prices across all consumer categories.

The new tariff had the impact of pushing up prices for domestic consumers using over 100 units per month to Sh31.75 a unit from Sh27.92 earlier.

This has since gone up to Sh33.10 per unit this month.

Other than the tariff that increased power prices, other factors that have contributed to the high cost of electricity include the higher reliance on thermal power plants, which use heavy fuel oil to generate electricity, with the cost of the fuel having risen in recent months.

Relying heavily on the thermal plants had been due to prolonged drought that saw a significant reduction in water levels at hydropower dams hence lower production.

With the recent rains, the government said the power agencies should now revert to higher use of hydropower and reduce reliance on thermal plants.