Electricity prices up four percent in June on expensive fuel

kenya power nairobi

Kenya Power's offices on Aga Khan Walk, Nairobi. The energy regulator has increased power prices for June by 3.7 per cent. 

Photo credit: File | Nation Media Group

The energy regulator has increased power prices for June by 3.7 per cent marking the second consecutive rise driven by higher fuel prices and a weak shilling.

The Energy and Petroleum Regulatory Authority (Epra) increased power prices for ordinary domestic consumers by Sh1 a unit from Sh27 in May to Sh28 per unit this month.

The rise was driven by a weak shilling, which saw the foreign exchange rate fluctuation adjustment increase by 226 per cent from just 84 cents per unit last month to Sh2.06 this month.

Fuel energy charge also rose by 2.5 per cent to Sh4.48, up from Sh4.38 per unit.

This marks the second month in which power prices are rising, dealing a blow to households and businesses that are now digging deeper into their pockets to pay their electricity bills.

The unit price of power for ordinary domestic consumers went up from Sh26 in April to Sh27 in May.

The increase was driven by a 12.3 per cent increase in the fuel energy charge, which rose from Sh3.9 to Sh4.38 per unit.

Kenyans will continue reeling under the weight of high electricity prices for the foreseeable future after the Epra approved new Kenya Power tariffs for the next three years.

The Epra in March raised base power tariffs by up to 63 per cent in the first tariff review since July 2018, hitting consumers who are also facing increased costs of food, fuel, cooking gas, transport, and other commodities.

Inflation hit eight per cent in May up from 7.9 per cent in April, according to the Kenya National Bureau of Statistics, as households find it increasingly tougher to keep up with increasing commodity prices.

During the month, year-on-year price changes in food, energy, and transport, which cover about 57 per cent of household budgets, were 10.2 per cent, 9.7 per cent, and 10.1 per cent, respectively.

The new tariffs upgraded millions of domestic customers who had been enjoying the subsidised lifeline tariff to the more expensive domestic ordinary tariff after the Epra reduced the lifeline threshold to just 30 units monthly down from 100 units.

Based on the new tariffs, Kenya Power will net Sh184.9 billion, Sh189.6 billion, and Sh193.7 billion in revenues for financial years 2023/24,2024/25, and 2025/26, respectively.

The tariff increase has already had an immediate effect on Kenya Power's revenues, with the utility announcing that its revenues rose by Sh1.3 billion in April, partly driven by the State's increase in electricity tariffs.

The tariff adjustment has, however, come a little too late to prevent the utility from recording an expected profit drop of more than 25 per cent in its fiscal year that ends in June.