Consumer rights protection comes of age in Kenya as watchdogs sharpen teeth

Consumer protection is now taking strong roots in Kenya, thanks to watchdogs that are growing sharper teeth.

The latest proposal by the energy regulator to lock electricity tariff reviews to the quality of service offered by Kenya Power has turned the spotlight on the growing role that regulators are now taking in protecting consumers.

Under the regulations, Kenya Power will be compelled to raise the reliability of electricity supply to get approval to hike its charges in the future in changes that are aimed at ensuring that customers get value for money when the utility charges higher prices.

The draft Electricity (Generation, Transmission, Distribution, and Supply) Tariff Setting Guidelines developed by the Energy and Petroleum Regulatory Authority (Epra), if adopted, will compel players along Kenya’s power supply chain to improve the quality of their services as part of tariff review.

“The determined tariffs must be accompanied by noticeable improvements in the quality of services provided by licensees. Approved tariffs will be linked to quality-related and efficiency key performance indicators which will be monitored during the tariff period,” say the regulations.

Property damage

Separately, Kenya Power and other licenced electricity suppliers are on edge as regulator advances rules on consumer compensation and penalties for unreliable services.

The energy regulator is advancing the development of new regulations that could see Kenya Power pay customers for unreliable electricity supply.

The Draft Electricity (Reliability and Quality of Supply and Quality of Service) Regulations, 2022 compel power firms to compensate customers for unplanned power outages that cause property damage, business loss, or death.

The companies will pay affected customers within three months after a claim is determined. However, clients will not be compensated if the power outage or irregular supply was caused by third-party interference with the firm’s distribution lines, inevitable accident, force majeure, customer’s fault, and illegal activities on the company’s infrastructure or if a report is not made within 30 days of the outage.

Epra’s moves are among the latest initiatives by regulators in recent years as they crack the whip on errant players operating within their regulatory purview.

These crackdowns mean that regulators are now stamping their authority and establishing themselves as the fence between consumers and growing unchecked capitalism in the Kenyan economy.

The Competition Authority of Kenya (CAK) is perhaps the regulator that has most cracked the whip on errant firms owing to its pivotal role as the watchdog of anti-consumer behaviour in all sectors of the economy and has claimed many notable scalps to prove it.

A major one was pushing Safaricom to drop exclusivity clauses that had barred its mobile money agents from dealing with other mobile money firms including Airtel and Telkom.

“The CAK’s action led the way to a vibrant market of more than 300,000 agents serving more than 66 million users,” said Prof Eleanor Fox of the New York University School of Law in a note celebrating some of the notable interventions that CAK has made since inception.

The authority in 2018 also punished a cabal of paint manufacturers that had colluded to fix market prices of their products by ordering them to pay millions of shillings in fines.

Discount structures

“The CAK’s preliminary finding was that the companies colluded on prices, discount structures, and transport charges, implying mark-ups over competitive prices,” said Prof Simon Roberts from the University of Johannesburg in the same note.

The Communications Authority of Kenya (CA) has on its part published new guidelines that could see telecommunications firms, including Safaricom, Airtel and Telkom Kenya compelled to offer free credit to their subscribers as compensation for outages on their systems.

The guidelines come at a time telcos have increasingly come under pressure from consumers through numerous complaints for bad services, such as poor voice and data services, which topped complaints to the regulator in the quarter that ended June 2022.

According to the regulations published in August last year, the telcos will be required to give rebates to subscribers equivalent to the value of airtime they would have used during the outage—a move aimed at pushing mobile operators to offer reliable services to customers.

“A licensee shall develop and implement an outage credit policy in situations where service is unavailable due to system interruptions and not as a result of scheduled and publicised maintenance, emergency, natural disaster or force majeure, accidental damage of infrastructure by third parties, terrorism, and vandalism,” the guidelines state.

Network outages

Mobile subscribers often experience network outages on some networks that do not have adequate telecommunications infrastructure in parts of the country.

This does not only derail communication but also mobile money transfer and data services, which have become essential to Kenyans.

“A licensee shall offer a rebate to subscribers or issue credit equivalent to usage over a similar period that outage lasted,” state the guidelines.

“The outage credit policy shall detail circumstances when credit, rebate or refund applies, process, procedure and timelines when rebate, credit or refund shall be issued to customer/subscriber.”

The outage credit policy has become popular globally. In July last year, Canadian mobile and internet giant Rogers said it would give credit to millions of its customers after a nationwide outage. The firm is one of three telcos that control over 90 percent of the country’s telecoms sector.

The spotlight will, however, remain on the success of the consumer protection initiatives amid concern that regulators often shied away from cracking the whip on errant service providers.