Most consumer categories enjoyed marginal drops in power prices last year, largely due to the impact of reduced base tariffs.
A reduction in electricity tariffs offset the impact of increased use of the expensive thermal power, saving consumers from a rise in power bills.
Official data shows that 1,480.24 Gigawatt-hours (GWh) of thermal power were generated in the year to December 2025, a jump of 31 per cent from 1,129.48GWh a year earlier.
Thermal power is the most expensive of all sources in the national grid, with a kilowatt-hour (kWh) going for an average of Sh35.09 last year, which is more than 10 times that of the cheapest, locally-produced hydropower, whose average price was Sh3.27 per kWh. Increased use of thermal power is, therefore, expected to raise electricity prices, but this did not happen last year since the energy sector regulator cut tariffs.
Base tariffs of electricity fell by up to 2.23 per cent, with domestic customers who consume more than 100kWh a month getting the biggest price cut, with a kilowatt-hour (kWh) dropping to Sh18.57 from Sh19.08 effective July 1 last year, offering consumers reprieve in a period when increased thermal power looked set to trigger steep power bills.
Most consumer categories enjoyed marginal drops in power prices last year, largely due to the impact of reduced base tariffs. For example, domestic users consuming up to 30kWh a month got 50.3kWh for Sh1,000 spent in December 2025, compared to 49.4kWh in January of the same year. “On July 1, 2025, there was a downward revision in the base tariff for most customer categories and a reduction in the total allowable losses from 17.5 per cent to 16.5 per cent, which ultimately reduced prices,” Daniel Kiptoo, director general of the Energy and Petroleum Regulatory Authority, said.
Epra Director-General Daniel Kiptoo during an event in November last year.
The base tariff (consumption charge) for electricity with a unit kWh for domestic customers using more than 100kWh a month dropped to Sh18.57 from Sh19.08 effective July 1, 2025, while the cost for a kWh for small businesses using more than 100 units a month fell to Sh19 from Sh19.40.
Domestic consumers using between 31-100kWh a month got 39.8 units for Sh1,000 in December last year, compared to 39.3 units for the same amount in January at the start of 2025.
New tariffs
The fall in base tariffs marks the last financial year of the tariffs that came into force in 2023. New tariffs, which will also be in force for three years, are expected to kick in from July 2026, after Epra considers the tariffs proposed by Kenya Power.
Fuel Cost Charge –the fee passed on to consumers to raise money to compensate thermal power plants— is a major reason thermal power is costly.
The charge averaged Sh3.5 per kWh last year. It is the single biggest of all the seven pass-through costs that are passed on to consumers.
Kenya has, over the years, been keen to cut on the use of thermal power, especially during the peak demand in the evening. The country has increased the importation of hydropower from Ethiopia and Uganda in order to reduce the usage of thermal power.
Thermal power is the most expensive, with a unit being ten times costlier than locally-generated hydropower produced (the cheapest source), whose average cost is Sh3.27 per kWh. Imported hydropower costs Sh8.91 per kWh, making it the second cheapest, ahead of geothermal at Sh9.48 per kWh.
Kenya Power taps thermal power during peak demand in the evening in order to avert a collapse of the grid when demand outstrips supply. Thermal power plants have also been instrumental in stabilising the electricity supply in the Coast region.
More than 70 percent of the thermal power in the national grid is supplied by two plants that are located on the Coast; Kipevu Diesel Power III, which is owned by Kenya Electricity Generating Company, and the privately owned Rabai Power.
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