ERC power bill shocker for consumers in new pricing

Poor households and a majority of the middle class will feel the biggest pinch of the new electricity tariffs published yesterday.

This, as the Energy Regulatory Commission (ERC) spared bulk consumers high power bills in a move that is likely to spark countrywide outrage.

The substantial power cost increase is despite the scrapping of the monthly fixed charges and reduction of the variable on the power bill such as the fuel cost charge and foreign exchange adjustments.

In the new structure arrived at following a storm over inflated bills and a complicated billing structure, Kenya Power’s middle class consumers will pay higher charges while their richer counterparts will enjoy substantial reductions on bills. While ERC said the very poor would see their bills come down, it has lowered the threshold to 10 Kilowatt-hours (units) per month, which can only benefit a consumer using a single power saving bulb and only for a few hours a day.

This could lock out a majority of power users. The regulator said 3.6 million consumers under 10 units would benefit from the lower tariff.

Consumer issues

Previously, the threshold – referred to as the lifeline tariff – was set at 50 units. Under the new structure, Kenyan households consuming 200 units per month will now pay Sh4,580 per month, an 11 per cent increase compared with Sh4,121 they would have paid under the current structure.

Low income users consuming less than 10 units of electricity every month, on the other hand, will pay Sh186, down from the current Sh278, while a fairly well off household consuming 1,500 units in the same period, will pay Sh29,700, compared to Sh33,800 that it would have paid under the current structure.

Pavel Oimeke, director-general ERC, said the new tariffs were based on consultations held with different stakeholders and also informed on the need to look into consumer issues as well as the need to make power utilities sustainable.

“The commission took into consideration best practices in tariff setting that emphasise social equity, economic prudence and financial viability of sector utilities,” said Mr Oimeke when he released the new tariffs in Nairobi.

In the new structure, which becomes effective tomorrow, domestic consumers will pay Sh16.60 per unit of electricity consumed, a six per cent reduction from the current Sh17.8 per unit.

The consumption charge is usually in addition to variable such as the fuel cost charge.

While the very poor consumers will benefit from reductions, ERC has also reviewed who should benefit from the subsidised rate of the ‘lifeline tariff’.

Oimeke said there was an overall reduction in the amount paid by domestic consumers within the lifeline tariff, which is a subsidised regime for low-income customers using under 10 units per month.

This accounts for about half of Kenya Power consumers. It previously allowed customers to use up to 50 units at a subsidised rate.

Eng Jared Othieno, acting chief executive Kenya Power, said the new tariffs would address many issues that consumers have raised on their bills, including simplified way of billing prepaid customers.