Consumers have been handed a slight relief after the energy regulator reduced electricity prices for July by 3.5 per cent, translating to lower power bills this month.
In the latest monthly review of electricity prices, the Energy and Petroleum Regulatory Authority (Epra) has cut the fuel energy charge to Sh4.02 per unit down from Sh4.49 last month.
Epra has further reduced the foreign exchange rate fluctuation adjustment to Sh1.75 per unit down from Sh2.06 per unit last month.
The net effect of the price review is that a domestic ordinary customer who has been paying Sh28 per kilowatt-hour (kWh) of electricity will now pay a slightly lower rate of Sh27 per unit this month.
The fuel energy charge is collected by Kenya Power and reimbursed to power producers for thermal electricity generation.
The lower fuel energy charge this month comes at a time Kenya is accelerating the displacement of thermal power from the grid with cheaper hydropower imports and geothermal power in what is aimed at reducing prices in the long run.
For instance, while only 1,577 gigawatt-hours (GWh) or 12.46 per cent of the 12,653GWh of the electricity purchased by Kenya Power in the financial year to June 2022 came from thermal sources, fuel costs made up 25 per cent (Sh26.48 billion) of the utility’s Sh106.13 billion power purchase costs.
Due to these high costs, Kenya has opted to retire many thermal power plants whose contracts are set to expire as the country, whose grid is about 93 per cent of clean energy, seeks to further grow the share of cheaper renewable power.
Kenya Power has for instance, said it will not renew the contract for the 73.5 megawatt (MW) diesel-powered Kipevu I and 60MW Muhoroni Gas Turbine (GT) thermal power plants owned by KenGen when their deals expire later in the year.
The State-owned utility says the power purchase agreement (PPA) of the privately-owned 52.5MW Iberafrica Power plant expired in the financial year that ended June 2023.
This means the contracts of four thermal power plants will have expired in just two years, following the expiry of Tsavo Power’s contract in September 2021.
Kenya Power Managing Director Joseph Siror last month said the expiry of the contracts of the thermal plants will enable the utility to take up more renewable energy, which will translate to lower power prices for consumers.
Kenya in January started importing 200MW from Ethiopia, which will be stepped up to 400MW in three years.
