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Power prices down by Sh3.44 per unit even as Kenya Power recoups Sh548m tariff cut deficit

Kenya Power

Epra says February’s power prices will come down by Sh3.44 per unit for all consumer categories.

Photo credit: File | Nation Media Group

What you need to know:

  • Epra says February’s power prices will come down by Sh3.44 per unit for all consumer categories.
  • Epra last year allowed Kenya Power to recover a total of Sh6.5 billion, which it lost through a 15 per cent tariff cut by deducting from electricity bills of consumers. The recovery of the Sh548 million from bills has prevented power prices from dropping by an even larger margin.
  • KenGen has reported a bigger generation of cheaper hydropower on filled-up dams, promising lower electricity bills for consumers.

The Energy and Petroleum Regulatory Authority (Epra) has allowed Kenya Power to recover Sh548 million that it lost through former President Uhuru Kenyatta’s tariff cut through this month’s power bills.

Epra last year let the utility to recover a total of Sh6.5 billion, which it lost through the 15 per cent tariff cut by deducting from electricity bills of consumers.

The deductions, which will be made through 12 installments, were first effected last month.

“We have allowed the recovery of revenue deficit arising from the extension of discounted user tariffs between January – March 2023 of Sh548 million being the 2nd of 12 installments,” said Epra in a disclosure. Mr Kenyatta enforced the tariff cut in January 2022 to lower the cost of electricity. The cut was to last until December 2022 and cost the utility revenue amounting to Sh26 billion.

However, President William Ruto extended the tariff cut by three more months to March 2023, which cost the company an extra Sh6.5 billion.

To reverse the revenue loss, Epra last year allowed Kenya Power to recover the money from power bills this year in a staggered manner.

The energy sector regulator has said that February’s power prices will come down significantly by Sh3.44 per unit for all consumer categories. However, the recovery of the Sh548 million from bills has prevented the prices from dropping by an even larger margin.

“[February bills will reduce due to] significant reduction in the forex adjustment on account of a decrease in the total foreign currency exchange payments made in January 2023,” Epra Director-General Daniel Kiptoo told the Business Daily yesterday.

The initial revenue deficit of Sh26 billion was shared among energy sector parastatals, while the government also reimbursed the utility a share of the lost revenue.

KenGen agreed to give Kenya Power a discount of Sh3.5 billion, the Kenya Electricity Transmission Company (Ketraco) agreed to a discount of Sh800 million and the Geothermal Development Company (GDC) agreed to shoulder Sh500 million.

The revenue loss from the tariff cut as well as foreign exchange losses pulled the firm into a net loss of Sh3.19 billion in the financial year to June 2023.

KenGen has reported a bigger generation of cheaper hydropower on filled-up dams, promising lower electricity bills for consumers.

“We are happy to report that we are receiving very good inflows from the Mount Kenya and Aberdares catchment areas which has led to high water levels at our dams,” said KenGen MD Peter Njenga.