Kenya Power eyes Sh14b monthly from tariff hikes

Kenya Power could earn up to Sh14 billion monthly in revenues from domestic consumers and small businesses alone if the proposal to hike their power tariffs by about 68 per cent is approved as the utility seeks to reverse profit dips it has started witnessing.

In the tariff application to Energy and Petroleum Regulatory Authority (Epra), Kenya Power proposed to raise power cost for the two categories to 21.68 per unit, excluding the current taxes and levies that amount to about Sh13 usually loaded in every unit of the power bill.

Those in this category are therefore proposed to pay an estimated Sh34.68 per unit, representing a 68 per cent rise from the current cost of Sh20.5 kWh rate.

Usage rate

At Sh34.68 per unit cost, it means that the utility is set to rake in about Sh14 billion in revenue from selling power to these consumers. This is based on the monthly power usage rate by domestic and small commercial customers who consume an average of 403.02 million kWh of electricity, according to Kenya Power’s data as of June 2022. 

Revenue earned could be even higher than the Sh14 billion considering that the tariffs for commercial and industrial customers are also facing a cost hike of up to Sh16.48, a 90 per cent surge compared to the Sh8.70 per unit they currently pay (minus loaded charges).  Commercial and industrial customers contribute the biggest share of Kenya Power’s revenues. This revenue benefit however highlights the additional financial pain that Kenyans will endure from April 2022, when the adjustments will be effected amid high cost of basic commodities like food and energy.

If implemented, the increase in electricity prices will worsen the cost of doing business, mainly hurting SMEs and hitting households’ budgets who contribute almost 90 per cent of Kenya Power’s customer base. Consumers Federation of Kenya (Cofek) has already rejected the proposal, whose public participation commences today, citing no justification for the tariff hikes.

“Cofek wholly rejects the proposed electricity tariffs which will overburden an already limping ‘Wanjiku’. EPRA must not proceed to subject the Kenya Power request to public participation without disclosure of technical and commercial losses,” Cofek Secretary General, Stephen Mutoro, said in a statement.

Electricity cost

The consumer watchdog calls for a 20 per cent cut in electricity prices for domestic user.  Electricity cost is a key determinant of economic growth and new investments in the country. Households might now be forced to devise ways of cutting power consumption like switching off electronics to save on their incomes. 

The power utility recorded a 9.5 per cent pre-tax profit dip across the six months to June 2022, attributed to increase in fuel power purchase costs on the back of the power cut subsidy that hugely dented its revenues.