Why electricity consumers are staring at another round of price hikes

Energy CS Charles Keter during an interview at his Nyayo House office on Wednesday 05/04/17 PHOTO:BONIFACE OKENDO

Kenyans could be in for another round of power price hikes with hydroelectric power generation expected to take a hit from the current dry spell.

This is despite sustained increases in power prices for more than a year that has been attributed to drought in 2017.

The Ministry of Energy last week said the country’s hydroelectricity generating projects, including Sondu Miriu and the Seven Forks in Embu, are performing dismally and water levels are at a point where the country could be forced to increasingly rely on expensive thermal power plants.

Energy CS Charles Keter said there is likelihood of shutting down the power producing station that relies on Masinga Dam in the coming weeks due to low levels of water. The situation is compounded by preliminary projections that some parts of the country might not receive adequate rains over the March-May long rains season.

Masinga power station produces 40 megawatts and is part of the crucial Seven Forks hydroelectricity system in Embu that Kenya relies on for cheap power. In case it is shut down, water from Masinga will, however, flow downstream to feed the other stations that will continue generating power but not at their peak.

Keter said the country will have no options but to turn on the thermal power plants, setting up Kenyans for another year of high power prices.

"With the adverse weather conditions we are experiencing right now, our dams are operating minimally. Sondu Miriu is not operating optimally. In Masinga, the main reservoir for Seven Forks, the water levels are coming down,” said Keter.

"If the dam level goes down, the implications are that we will have to use a lot of thermal. The effect is that if the water levels further go down, we will have to start running Rabai and Kipevu I, II and II."

According to KenGen, the minimum operating level for Masinga is 1,037 metres above sea level but should the levels drop below this then the firm, which generates power from the Seven Folks, will have to shut down the 40 MW station at Masinga. The water released will feed into the other power stations downstream including Kamburu, Gitaru and Kiambere.

Last year was a tough one for power consumers following the prolonged dry spell and they had to use electricity generated from the expensive thermal power plants. The situation improved towards end year as the October-December short rains season fed some water to the dams but the rains were not adequate to sustain hydroelectricity to the next rains season in April.

While the Meteorological Department is yet to publish the outlook for the March-May long rains season, preliminary reports do not paint a rosy picture. According to the Famine Early Warning System Network (FEWSNET), a USAID backed weather and food security analysis system, rains in many parts of the country might be depressed during the season.

"The long rains (March–May 2018) are still expected to be below average in the southeast and parts of the northeast, but are now forecast to be average tending to slightly above average across the western and central areas of the country,” said the network in a December outlook.

If it so passes that the Masinga power station is shut down, it will be the third time in under a year, pointing to a worrying trend and a cause for concern about the future of hydroelectricity in Kenya. When producing at optimum levels, hydroelectricity account for about 45 per cent of the power consumed in the country.

Electricity generated by these power sources are the cheapest at Sh3 per unit, which in comparison to geothermal power which costs about Sh7 per unit. It is also in comparison to the thermal power producers, which replaces hydro power whenever water levels are low, and costs Sh21 per unit. Though there have been plans to review contracts for the thermal power producers in a bid to bring down the cost of electricity, the efforts appear not to be moving forward.

Power bills have risen by about 21 per cent over the last one and a half years. A household consuming 200 units of electricity paid Sh4,068 in January this year, compared to Sh3,361 in July 2016. This has largely been due to increased consumption of power generated by the diesel fired power plants, whereby the amount of money paid to the thermal power firms has nearly doubled from to Sh4.35 in January 2018 from Sh2.31 per unit in November 2016.

Kenya Power paid Sh25 billion in the year to June 2017 as fuel costs to companies using heavy fuel to generate electricity, which was about 80 per cent more than it paid to these firms in 2016. These costs are passed through costs and are all borne by the consumers.