More pain looms as cost of electricity set to surge

Thursday, January 26th, 2023 08:40 | By
The increase in electricity prices is expected to mainly hurt individuals and small and medium enterprises. PHOTO/File

More financial pain awaits Kenyans as the current electricity tariffs are set to increase by about 5.8 per cent effective April should the proposal by Kenya Power get approval from the Energy and Petroleum Regulatory Authority (Epra).

The tariff review, which is subject to public participation from next Tuesday, aims at boosting the financial levels of the utility after it recorded a profit dip in its last half-year results following the 15 per cent power cut offered under ex-president Uhuru Kenyatta’s administration.

As such, domestic users whose consumption exceeds 30 units but below 100 units will pay 21.68 per kilowatt-hour (kWh) unit, up from the current 20.4 per unit paid by all users consuming less than 100 kWh of electricity since the elapse of power subsidy.

The Energy Act 2019 empowers Epra to review power tariffs every three years, although this hasn’t been the case as the regulator sought to ease inflation pressure on households and businesses.

“There is need for an electricity retail tariff that is just and reasonable to allow KPLC maintain its financial integrity…the rationale of this Retail Tariff Review is to incorporate change in electricity sub-sector cost structure and update key assumption with an aim of providing adequate sector revenue requirement,” Kenya Power said in the tariff application to Epra. The increase in electricity prices is expected to mainly hurt individuals and SMEs who contribute almost 90 per cent of Kenya Power’s customer base. The number of total customers connected to electricity has grown from 8.3 million in 2020/21 to 8.9 million customers as of July 2022.

Changes in power prices could worsen the cost of living and further rattle big power consumers like manufacturers who have been switching from the national grid.

Customer category

The power distributor has also introduced a new tariff for those using below 30 units of power per month, who will be charged Sh14 per kWh should Epra give the nod to the utility’s request. Kenya Power has defended the new customer category, noting that it will help poor households purchase electricity based on their earnings.

“This will align the objectives of the lifeline/social tariff customer category with the correct social class normally defined by the level of income,” said Kenya Power. For commercial and industrial customers who use more than 15,000 units monthly, their tariff will increase to Sh16.48 per unit from Sh12. Street lighting tariff will be put at Sh11 per unit from the current Sh7.5/kWh, payable by devolved units and other government agencies.

A special tariff for the e-mobility sector, set at Sh17 kWh for those who consume 200-15,000 units, has also been captured in the proposed tariff structure.  E-mobility tariff, which Kenya Power says is discounted, could help the utility flatten the power demand curve and save revenue leakages through the utilisation of idle power at night.

By this, electric vehicle (EV) charging stations might be forced to charge during a certain time, mostly at night when power demand is low, to enjoy the discount, but only if they meet the set power consumption threshold.

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