Steep power bills as fuel cost levy rises 47 percent


An attendant fuels a vehicle at a petrol station in Nyeri on June 9, 2021.  

Photo credit: Joseph Kanyi | Nation Media Group

Households and businesses face steeper electricity bills this month after the regulator increased the fuel cost component of the power bill by 46.6 percent, the highest in more than five years.

The Energy and Petroleum Regulatory Authority (Epra) raised the fuel cost charge (FCC) to Sh6.79 per kilowatt-hour (kWh) of electricity up from Sh4.63. The FCC is the single-biggest variable cost that is adjusted monthly and is collected by Kenya Power on behalf of the expensive thermal power generators.

“Pursuant to Clause 1 of Part III of the Schedule of Tariffs 2018, notice is given that all prices for electrical energy specified in Part II of the said Schedule will be liable to a fuel energy cost charge of plus 679 Kenya cents per kWh for all meter readings to be taken in September 2022,” Epra director-general Daniel Kiptoo said in a Friday gazette notice.

The energy regulator also nearly raised the Foreign Exchange Fluctuation Adjustment (Ferfa) to Sh1.36 up from 73 cents to cater for the weakening of the Kenyan shilling against the US dollar.

This is the first time Epra has adjusted the rates since December.

The new prices, which have pushed power costs to a new high, come after the government ended its subsidy on electricity.

In July, Mr Kiptoo told Nation the government had been subsidising the costs to cushion consumers.  “The government working with the regulator is cushioning consumers in a similar fashion to the petroleum stabilisation despite the global rise in energy prices. The holding constant of the pass-through costs, particularly the FCC, cushions consumers from the shocks in the FCC,” said Mr Kiptoo at the time.

Consumers are already bearing the brunt of the new prices, getting less electricity for the same amount of money.

For instance, a domestic consumer who got 45.73kWh for Sh1,000 is now getting 39.68kWh, a 13.2 percent drop.

The price increase negates the gains consumers had made in January after Epra cut electricity prices by 15 percent following a pledge by President Uhuru Kenyatta to lower power costs.

The former President did not achieve his target of dropping power prices by a further 15 percent through renegotiation with independent power producers (IPPs) before his exit.

The removal of the electricity subsidy and partial withdrawal of the fuel subsidy comes amid a policy change by the new administration of President William Ruto who is keen to withdraw consumption subsidies.

President Ruto says he will do away with subsidies on fuel and food, arguing they often lead to product shortages.