Hopes for cheaper electricity dim as bills hit 40-month high

Fuel cost is the highest component in the computation of a customer’s bill. [Kibata Kihu, Standard]

Power bills have hit a 40-month high following an increase in the fuel surcharge levied on electricity tariffs, throwing consumers in the abyss despite President Uhuru Kenyatta’s order to cut prices. 

The Energy and Petroleum Regulatory Authority (Epra), in a Friday gazette notice, raised the fuel cost charge (FCC) to Sh4.63 per kilowatt-hour from Sh4.21 last month - the highest since June 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 Kenya cents per kilowatt-hour (kWh) for all meter readings to be taken in December 2021,” said Epra.

The increase, which will reflect in all meter readings for this month, deals a blow to consumers who were expecting a 15 per cent cut as promised by the President on Monday.

Uhuru had in his Jamuhuri Day speech told Kenyans that they were going to enjoy a 15 per cent cut in electricity prices, reflecting in December bills, followed by another 15 per cent cut by March next year.

But the increased FCC, accompanied by a higher foreign exchange fluctuation adjustment to Sh0.7314 from Sh0.73 last month, means consumers will get fewer units compared to last month for the same spending.

The increased FCC is despite fuel prices remaining unchanged since October. The shilling has, however, been consistently weakening against the dollar, opening Friday at a new all-time low of 112.96 units.

The upward review of electricity prices also contradicts a Kenya Power statement issued Thursday evening indicating that it had started implementing Uhuru’s directive.

“Kenya Power wishes to inform its customers that the first 15 per cent reduction in the cost of power will be implemented on power consumption in the month of December 2021,” said the firm.

“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 statement was silent on how prepaid customers purchasing electricity during this month were going to benefit.

Electricity tariff reviews are usually in the hands of Epra, which every month publishes prices to be followed by Kenya Power.

This means Kenya Power’s hands are tied on this matter until Epra gazettes prices to implement the president’s directive.

The first 15 per cent cut on power bills was hinged on Kenya Power cutting its system losses - a tall order, going by the previous losses.

The losses have averaged 22.2 per cent in the last five financial years - the best being 18.9 per cent in the year ended June 2017.

The technical and commercial losses are the difference between the total amount of energy procured and the amount sold.

Technical losses occur when electrical energy is dissipated in the process of transmission while commercial losses are attributed to pilferage, faulty meters and meter tampering.

Kenya Power in the financial year ended June 2021 lost 23.95 per cent of the units it had purchased to sell, an equivalent of Sh39.67 billion revenue loss, according to a report by the Auditor-General.