Kenya Power tariff review locked to service quality
Upward reviews of electricity prices will be pegged on the quality of services rendered by utility firms including Kenya Power, the regulator said, in a move aimed at ensuring consumers get real value for money.
Draft regulations by the Energy and Petroleum Regulatory Authority (Epra), if adopted, will compel power utility firms to better the quality of their services as justification for higher revenues from charges to consumers to finance their operations and expansion.
The regulations also apply to the Kenya Electricity Transmission Company (Ketraco), KenGen, and other power producers. While the regulations have not prescribed a penalty for failing to improve the quality of service despite a tariff increase, it is likely the firm in question would be hit with penalties or obstacles in future tariff applications.
“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.
This comes at a time Kenya Power has consistently come under pressure for providing poor quality services including unreliable power supply, slow pace of connecting new customers to the grid and repairing faulty equipment such as transformers and other key installations.
The utility, however, contends that it is experiencing a cash crunch due to the failure by Epra to approve new higher tariffs on time to enable it to collect more revenues, which have inhibited its ability to provide quality and reliable services to its estimated 8.9 million customers.
Kenya Power in October made a tariff review application to the energy regulator for higher energy charges that will be in place for the next three years.
The new tariffs, which are expected to take effect on April 1, could see electricity prices for some poor households rise by up to 117 per cent.
“In order to achieve this broad mandate, there is a need for an electricity retail tariff that is just and reasonable to allow KPLC to maintain its financial integrity, attract capital, operate efficiently and compensate investors for risks assumed,” said the company.
Epra will conduct public participation forums on the proposed tariff from Tuesday in Nairobi before the sessions are rolled out to other regions.