Confusion after State publishes rules to end KPLC monopoly

An ongoing repair of electricity cables in Bondeni area, Mombasa County. [File, Standard]

Energy sector stakeholders have raised concerns over the move by the Energy Ministry to publish regulations aimed at ushering in competition in the retail and distribution of electricity before concluding a public participation exercise. 

The new regulations are aimed at opening up the distribution and retail of electricity in the country - making operational segments of the Energy Act 2019. The move that could end Kenya Power’s monopoly.

The Ministry on Friday gazetted the Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024 despite plans by the Energy and Petroleum Regulatory Authority (Epra) to hold a public participation exercise this week. 

On the same day that the Ministry gazetted the regulations, Epra invited sector players “to a public participation forum on the Draft Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024 on March 4, 2024”. 

Eng Isaac Ndereva, the executive director of the Electricity Consumers Society of Kenya (Elcos) dismissed the public participation as a way to rubber-stamp the subsidiary law without considering what the industry has to say. 

“The public is being taken for granted. Why should we have stakeholder engagement after the document has been gazetted? For what purpose?” he posed. 

He noted that it is the second time the regulations have been published in just two weeks. In addition to Friday’s gazettement, the regulations were also gazetted on February 16 through a special gazette. 

“This regulation has been gazetted twice in two weeks. It has a lot of interest and we are complaining,” said Ndereva, also adding that the gazette notice does not have a signatory. 

The Energy Act 2019 opened up the market to other electricity distributors and retailers to compete with Kenya Power. The regulations offer modalities on how interested players can get into the lucrative but capital-intensive electricity retail sector. 

They require Kenya Power and the Kenya Electricity Transmission Company (Ketraco) to open up their transmission and distribution networks to other users. 

“A transmission or distribution licensee shall provide non-discriminatory open access to its transmission or distribution system as the case may be for use by any licensee or eligible consumer upon payment of wheeling or use of system charges as shall be prescribed under these regulations and such other fees and compliance with such minimum requirements of the transmission or distribution licensee,” read the regulations in part. 

Ketraco operates high-voltage transmission lines while Kenya Power runs the distribution and retail networks.

Kenya Power is expected to transfer some of its electricity distribution assets to Ketraco in a transaction approved by the Cabinet last year and expected to cost Ketraco an estimated Sh20 billion. 

While the regulations might open up the market, the distribution and retail end of the sector remains capital incentive and it might take years before there are major entrants. There are however companies that have been setting up mini-grids across the country that could now start scaling up and bringing competition to Kenya Power.

The firm however faces a major threat from power producers, such as KenGen, which are eyeing large power consumers. KenGen, for instance, plans to set up an industrial park at Olkaria close to its geothermal power plants.