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Chandaria wins Sh58m electricity bill refund

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KPLC employees. The power utility firm will refund Chandaria Sh49.83 million being the total over-billed amount.

The Energy Regulatory Commission (ERC) has approved a Sh58 million refund to Chandaria Industrial Limited in a long running dispute with the Kenya Power and Lighting Company (KPLC) over billings.

Chandaria had on November 8, 2007 lodged a compliant with the ERC against KPLC claiming that its power bills had abnormally shot-up since 1998 after the power utility firm replaced electromechanical meters with electronic ones at its factory premises within Nairobi’s Baba Dogo area.

In its application to the regulator, Chandaria claimed that in the eight-year period between 1998 and 2006 it was over-billed by KPLC by between 15 and 24 per cent thanks to suspected erroneous connections when the new meters were fitted.

The average billing over the eight-year window was about Sh5.5 million per month — a figure Chandaria disputed because their check meters installed in 2006 showed massive variations in consumption by up to 24 per cent.

The suspected connection errors were later rectified on October 30, 2006 with meters installed by Chandaria and those fitted by KPLC now recording similar readings. A joint assessment under a dispute resolution panel (DRP) constituted by the regulator visited the factory premises and conducted investigations on the claims by Chandaria before handing over a report to the ERC on August 20 this year.

According to the DRP’s report, an erroneous connection at the factory in Baba Dogo had resulted in KPLC over-billing Chandaria by a total of 57.6 million, which included Sh7.78 million in value added tax (VAT) as well as levies for the defunct Electricity Regulatory Board (ERB) and the Rural Electrification Programme (REP).

“Information supplied by both parties pointed to a mistake in the wiring of the meters and auxiliary current and voltage transformers,” the panel noted in its report, adding that the actual hard copy bills tendered to Chandaria by KPLC we scrutinised and discrepancies realised.

“Test bench simulations established that the blue phase current supply into the meters had been reversed and voltage leads of the yellow and blue phases had been interchanged.” The report was discussed on October 28 during a meeting of the ERC in Nairobi.

“The commission deliberated on the report of the DRP. .. The commission approved the report and its recommendations,” ERC director-general Kaburu Mwirichia said in a gazette notice on Friday, placing the liability on KPLC.

In its ruling, ERC said KPLC will refund Chandaria Sh49.83 million being the total over-billed amount exclusive of the Sh7.79 million VAT deductions, which Chandaria shall claim directly from the Kenya Revenue Authority (KRA).

“KPLC shall recover a sum of Sh241,415 from ERC being ERB levy erroneously collected from Chandaria and remitted to ERC,” the regulator stated.

ERC also ruled that KPLC will recover Sh1.7 million from the Rural Electrification Authority (REA) being REP levy erroneously collected from Chandaria and remitted to its predecessor. The landmark ruling is expected to bring into focus the power firm’s metering system that has on many occasions put it at loggerheads with consumers over costing.

A common complaint by consumers is poor meter reading by KPLC staff leading to erroneous billing. The power firm has, on its part, blamed some consumers for allegedly tampering with meters, causing it losses.

Phased migration

To address the challenges, KPLC is betting on pre-paid meters. This is part of a five-year plan that should see the utility company’s 1.3 million domestic, small and medium-sized commercial clients shift to a new system of paying for electricity before actual consumption.

Besides saving huge costs incurred on numerous clerical staff who are sent out to take post-paid meter readings and eventually disconnect defaulting customers, KPLC expects to significantly improve its cash flow position by adopting pre-paid meters as customers will only consume units that they can afford to pay for.

The power utility firm expects to install about 300,000 pre-paid meters in December.

An estimated 100,000 industrial consumers whose core activities require un-interrupted power supply will, however, be allowed to remain on the post-paid system at the end of the phased migration.

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