Kenya Power system losses rise as MPs call for low energy costs

Kenya Power employees in a mobile workstation at Uhuru Gardens during Labor Day celebrations. [File, Standard]

The amount of electricity lost during transmission from power plants to households and businesses registered an increase for the second consecutive year, further sustaining the high cost of electricity in the country.  

The system losses rose to 23.16 per cent in the year to June 2024 from 23 per cent in 2023, according to Kenya Power’s annual report.

This has been on the rise from 22.44 per cent seen in 2022, even as the National Assembly’s Departmental Committee on Energy told Kenya Power to undertake a review of its distribution infrastructure to pinpoint the causes of losses and deal with them.

The Committee, in a new report, notes that the firm can save consumers upwards of Sh6 billion annually if it cysts system losses to 14.5 per cent.

The cost that comes with system losses is passed on to consumers, which has meant that the recent reduction in cost of power could have been higher had Kenya Power put in adequate measures to arrest the losses. The Energy and Petroleum Regulatory Authority (Epra) allows the power distributor to recover 19.9 per cent of the losses from consumers while it bears the cost of losses above this threshold.

“Overall system losses rose to 23.16 per cent, a marginal increase of 0.16 per cent, primarily attributed to higher transmission losses,” said Kenya Power in the annual report. It explained that while it had put in efforts to reduce system losses that yielded system loss reduction in its low-voltage network, there was a surge in losses on the medium-voltage networks during the year.

“This was due to higher generation levels from hydro and wind sources, along with increased imports via the Ethiopia-Kenya interconnector, which placed additional loads on the existing transmission network,” said the firm.

System losses are made up of two components - technical and commercial losses.

Technical losses occur during the transmission and distribution of electricity while commercial losses are theft by consumers, who are in some instances helped by electricity sector employees.

“Reducing energy losses remains a key focus area for driving sales growth and improving business performance. During the year, the company strengthened its loss reduction initiatives, including transformer maintenance, smart meter installations, enhanced inspections, and faulty meter replacements,” said Kenya Power.

Initiatives aimed at energy loss reduction included the installation of smart meters for industry and small commercial customers. It installed 105,071 smart meters and replaced another 331,925 faulty meters.

System losses were among the issues that came up when Parliament’s Departmental Committee on Energy made an inquiry into the high cost of electricity in the country. 

While the cost of power has been on the decline over the last one year largely on account of improved production from hydropower dams, there is a feeling that the reduction could have been higher were it not for factors such as high system losses.

The cost of a unit of electricity (kilowatt hour-kWh) for domestic consumers using more than 100 units a month fell to Sh28.51 in November from a high of Sh36.80 in January this year.

The recent had come following a sharp increase from Sh22 per kWh in August 2022. 

The Committee on Energy in its report to the National Assembly noted that from submissions, there was a need to reduce transmission losses to cut the cost of power. 

In conducting the inquiry, the committee invited stakeholders to present their views on what should be done to tame the cost of power.

In its submission, the Kenya Association of Manufacturers (KAM) underscored the importance of taming system losses, noting that reducing the losses from the current level to 14.5 per cent can save consumers Sh6 billion annually.

It noted that currently, Kenya Power recovered Sh19.33 billion from consumers for system losses but at 14.5 per cent, this could go down to Sh13.11 billion.