High electricity bills shock for the big consumers

Electricity consumers queue to pay their bills at the Kenya Power offices in Nakuru town. FILE 

By Victor Juma, vjuma@ke.nationmedia.com

In Summary

• Monthly charges rise for commercial and big domestic users but Kenya Power’s small customers get relief from fall in tariffs.
• Energy Regulatory Commission, the regulator, increased the power tariffs to strengthen electricity distributor Kenya Power’s financial position that had weakened significantly since the last review in July 2008.
• Power tariffs are expected to increase further in July for certain categories of consumers before taking a downward path in July 2015.

Industrialists and big domestic consumers are facing higher electricity costs burden this month following the coming into effect of tariff increments announced in December.

The power bills escalation arises from the fact that the drop in fuel and forex adjustment costs in the past month failed to offset the higher tariffs set for core consumption leaving users worse off.

Current power bills show that variable segments of costing such as inflation, fuel and forex adjustments dropped by a total of Sh2.10 per unit of power consumed in December that postpaid consumers must settle this month.

While this was enough to offset the Sh0.50 per kilowatt hour increase in the energy charge for those consuming less than 50 units per month set in December’s review of tariffs it was not adequate to cushion consumers of more than 200 Kwh whose tariffs rose by a minimum of Sh3.52 per unit.

Energy Regulatory Commission, the regulator, increased the power tariffs to strengthen electricity distributor Kenya Power’s financial position that had weakened significantly since the last review in July 2008.

Power tariffs are expected to increase further in July for certain categories of consumers before taking a downward path in July 2015.

The Ministry of Energy has, however, announced that it expects the injection of additional 280 megawatts of cheaper geothermal power to further reduce the fuel cost charge — one of the biggest factors in electricity billings — bringing more relief to consumers.

“Completion of these two projects (Olkaria I and IV) should effectively address the issue of power costs in Kenya,” Energy secretary Davis Chirchir said on Monday, adding that he expects consumers to start feeling the impact from July.

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Kenya Power’s billings show that low-income households using 50 Kwh are paying Sh517.2 for December consumption compared to Sh609.7 for the same units in November, representing a 15.2 per cent drop.

The steep drop in charges arises from the fact that the inflation levy that had averaged Sh0.3 per Kwh in the three months to November has been eliminated from the billings.

The ERC said inflation had been included in the core non-fuel tariffs, a move that saw it disappear as a separate item in the December bills.

ERC officials said the stand-alone inflation charge is likely to remain out of power bills until July when it may be reintroduced with the update of the cost of living index.

Variable charges of forex and fuel also dropped to Sh0.15 and Sh5.19 per Kwh respectively in December from Sh1.31 and Sh5.63 in November.

The lower forex charge is linked to the revision of the benchmark exchange rate from the previous 64.9 units to the dollar — set in 2008 — to the current 84.9 that closely trails the existing market rates.