What you need to know:
- Escalating tensions in Iraq have spilled over to energy market, pushing crude oil prices up
- The power costs have come as a shocker to consumers, some who told the Sunday Nation that their bills had nearly doubled in June. Pre-paid consumers also said they were getting half the units for the same amount of money they have been spending monthly.
If you are a power consumer, you may have noticed an upward adjustment in your electricity bill since May.
The power costs have come as a shocker to consumers, some who told the Sunday Nation that their bills had nearly doubled in June. Pre-paid consumers also said they were getting half the units for the same amount of money they have been spending monthly.
Some pre-paid customers, whom the Sunday Nation spoke to, say the Sh2,000 they used to spend a month on power can now only last two weeks.
A post-paid customer whose bill has previously ranged between Sh3,000 and Sh4,500 was shocked to receive a Sh25,000 bill. Another whose bill has ranged between Sh500 and Sh600 got a Sh1,211 bill this month.
“I am shocked because my electricity consumption has not changed,” said Joseph Mungai who wants the Kenya Power to explain the sudden increase.
But the Energy Regulatory Commission (ERC) says the upward adjustment in electricity bills has come as a result of a review of the fuel cost to recover arrears that were not collected since December last year when the price of crude oil went up.
ERC’s acting director of economic regulation Dr John Mutua told the Sunday Nation that the fuel cost has been rising steadily due to the failure of the long rains and the political instability in large oil producers like Iraq.
In January, the price of crude oil in the international market stood at Sh8,004 ($92) per barrel. But the prices have since risen by 14 per cent to Sh9,135 ($105) per barrel, partly affected by the unrest in Iraq.
According to the electricity tariffs released by ERC in November last year, fuel cost was set at Sh5.19 per unit of electricity (kilowatt hour) but Dr Mutua said the reality has been different.
For instance, he said the fuel cost went up to Sh5.77 in December yet customers were still charged Sh5.19. Similarly, the actual fuel cost was Sh5.24 in January, February was Sh5.81, March was Sh7.23, and April was Sh7.07, dropping slightly in May to Sh6.31.
“We had forecast that fuel cost would drop but then the long rains failed, forcing power producers to shift to the more expensive diesel powered generators to plug the gap,” Dr Mutua said.
All this while, Dr Mutua explained, the customers were still paying Sh5.19, leaving Kenya Power and the power generators to bear the extra cost.
“We started charging Sh7.22 from May to recover the arrears. Once we recover all the arrears and hoping that KenGen also commissions the 140 megawatt Ol Karia geothermal project, prices will drop,” said Dr Mutua.
Dr Mutua said there was also optimism that the power bills will go down given that the water levels at the Masinga dam have gone up by two metres. “The rains have also been fine in Sondu and Turkwel areas,” he added.
The regulator is also looking forward to the commissioning of the 140 megawatt Ol Karia geothermal project which, combined with the good rains, will reduce reliance on diesel powered generators.
KenGen has in the last few weeks been carrying out tests on the Ol Karia geothermal project as it prepares to load the power onto the national grid, an exercise which will not happen overnight.
The high energy costs have not just hit individual power consumers but also industrial consumers. For instance, Tata Chemicals last month announced that it was scaling down operations by closing down its main factory in Magadi, leaving at least 200 permanent workers jobless. The plant to be shut accounts for 70 per cent of the company’s energy consumption.
The soda ash manufacturer owned by one of India’s largest companies blamed the high energy costs for the closure. “This facility has become sensitive due to the high energy costs that Tata Chemicals Magadi incurs.
The company intends to stabilise the loss-making that it has encountered,” its managing director, Mr Jack Muchira Mbui, told the press last month. Mr Mbui said the firm spends about Sh300m per month on energy costs.