Electricity prices for some poor households could rise by up to 117 percent should the energy regulator approve a tariff review proposal by Kenya Power aimed at generating more cash for the utility.
Kenya Power in October last year made a tariff review application to the Energy and Petroleum Regulatory Authority (Epra) for higher energy charge tariffs that will be in place for the next three years.
The utility has for years pushed for a review of the current power tariffs arguing that its revenue requirements have grown sharply despite revenues from electricity remaining the same forcing it to rely on increasing sales.
“In order to achieve this broad mandate, there is a need for an electricity retail tariff that is just and reasonable to allow Kenya Power Company to maintain its financial integrity, attract capital, operate efficiently and compensate investors for risks assumed,” said the company.
“The rationale of this retail tariff review is to incorporate change in electricity sub-sector cost structure and update key assumption with an aim of providing adequate sector revenue requirements,” it said.
Epra has now scheduled public participation for scrutiny of the tariff in which the utility has proposed the introduction of a new tariff of Sh14 per kilowatt-hour (kWh) for customers who use less than 30 units of power monthly.
Kenya Power offices on Aga Khan Walk in Nairobi.
In the current tariff that was approved in November 2018 – which was temporarily cut by Epra in January last year – customers who use less than 100 units per month pay Sh10/kWh and those who use more than that amount pay Sh15.8 per unit.
This means that if the tariff is passed in its current form, customers whose average monthly usage exceeds 30 units but is below 100 units will pay the tariff of Sh21.68 per unit from the current Sh10 per unit, an increase of 117 percent.
For those who use less than 30 units per month, the new tariff will be an increase of 40 percent, which will affect nearly a third of all power customers.
This is because while Kenya Power has some 8.9 million customers, Epra estimates that 3 million of these customers use less than 10 units of electricity monthly.
The utility says the changes in the pricing of the tariffs for these poor customers will enable them to pay bills based on their earnings.
“There is a proposal to revise the life-line consumption band for both small commercial and domestic customers from the current 100kWh/month to 30kWh/month. This will align the objectives of the lifeline/social tariff customer category with the correct social class normally defined by the level of income,” said Kenya Power.
For commercial and industrial customers who use more than 15,000 units monthly, their tariff will increase to Sh16.48 per unit from Sh12 while their demand charge will also go up to Sh1,100 per kilovolt-ampere (kVA) from the current Sh800.
County governments and other government agencies will also be hit with a higher street lighting tariff of Sh11 per unit from the current Sh7.5/kWh-- in what will further increase their electricity costs even as many of these entities continue to default on their power bills.
“Pursuant to Section 165 of the Energy Act, 2019, that provides for variation of effective rates and tariffs charged to consumers for the supply and consumption of electricity, KPLC assumes the approval of a multi-year retail tariff application that would become effective on April 2023,” said Kenya Power.
The new tariffs, if approved, will be a blow not only to households but also to businesses that are reeling from high costs of electricity driven by inflation, high fuel costs, and a weaker shilling.
This comes barely weeks after President William Ruto promised not to increase power costs following the end of the year-long 15 percent power prices cut in January last year.
President Ruto had early this month said the government is working towards lowering electricity tariffs.
The government, said the Head of State, will prioritize low-income earners and manufacturers in the tariff review process.
“In three months, we will have public consultation to ensure that we have tariffs that are affordable to those at the bottom of the economic pyramid and our manufacturers,” said Dr Ruto.
Epra will conduct public participation forums on the proposed tariff from Tuesday in Nairobi before the forums are rolled out to other regions.
