Users to enjoy reduced power tariffs in line with Uhuru directive

The energy regulator is set to cut electricity tariffs in line with President Uhuru Kenyatta’s directive to lower power prices by a third.

The Energy and Petroleum Regulatory Authority (Epra) said it is awaiting a tariff review application by utility firm, Kenya Power, for approval.

“We are engaging the Ministry of Energy and Kenya Power but awaiting Kenya Power’s tariff application so that we can process it in accordance with the law,” Epra Director-General Daniel Kiptoo told Sunday Nation.

This marks an ironic twist as Kenya Power had pushed to increase electricity prices by up to 20 per cent to increase its revenues. The firm had submitted a tariff review application.

However, in September, then-Energy Cabinet Secretary Charles Keter, who has since been replaced by Dr Monica Juma, said the firm had dropped the bid and withdrawn the application. 

The directive to cut power costs hinges on new retail and bulk prices, usually set every three years by Epra. Kenya Power has numerously blamed the current tariffs, set in 2018, for its financial woes, claiming they do not reflect the its actual revenue needs. It said its current revenues are not enough to sustain its operations. But now the company will be required to give a window to lower the tariffs by up to 30 per cent.

Cost of electricity

The President last week said reduction of electricity prices would instead be rolled out in two phases targeting lowering of transmission losses and power theft, and review of power purchase agreements (PPAs).

“I am pleased to note that the pathway to reduce the cost of electricity by over 30 percent is on course,” President Kenyatta said.

Mr Kenyatta said the government had initiated talks with independent power producers for renegotiation of PPAs to allow reduced prices early next year. However, reducing prices by a third could sink the firm, which recently bounced back into profitability, back into heavy losses.

Kenya Power posted revenues of Sh144.1 billion in the year to June, which would reduce by Sh44 billion should the government follow through on the directive.

Its cost of sales alone, which includes payments to power producers for power purchase and fuel costs, hit Sh94.2 billion, virtually nearly depleting the revenues.

Separately, Epra on Friday raised electricity prices for December after increasing the fuel cost component of the power bill. It raised the fuel cost charge to Sh4.63 a kilowatt-hour (kWh), the highest since June 2018 when it hit Sh4.75.

Electricity price changes

This is an increase of 42 cents per unit from last month’s FCC of Sh4.21/kWh reflecting rising prices of diesel that is used to run thermal power plants following a recent surge of global crude oil prices.

“Pursuant to Clause 1 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 463 cents per kWh for all meter readings to be taken in December 2021,” Mr Kiptoo said in the notice.

The electricity price changes often immediately take effect on the 8th of each month for prepaid power users while postpaid customers incur the higher cost at the end of the month.

The higher electricity prices are a blow to both domestic and industrial power users who were banking on lower power prices following President Kenyatta’s cheaper power promised by Christmas.

Utility firm Kenya Power on Thursday announced it would lower electricity prices this month following the President’s promise. 

“In fulfilment of this pledge, Kenya Power wishes to inform its customers that the first 15 percent reduction in the cost of power will be implemented on power consumption in the month of December 2021. This will be reflected in power bills covering that period, which, as is normal practice, will be sent to consumers in the following month, in this case, January 2022,” the company said.

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