ERC rejects Kenya Power’s bid to raise electricity tariffs

What you need to know:

Energy regulator hands consumers relief, saying charges will stay low to spur growth.
Kenya Power had sought the ERC’s approval to raise the power charges from July in order to cover rising operation costs.
Energy PS Joseph Njoroge last month ruled out tariff increments and instead directed Kenya Power to cut system losses to grow its revenues.

The Energy Regulatory Commission (ERC) has shot down Kenya Power’s quest to raise electricity tariffs, sparing consumers higher bills and denying the Nairobi Securities Exchange-listed firm more revenues.

Kenya Power had sought the ERC’s approval to raise the power charges from July to cover rising operation costs and upgrade its transmission network.

The regulator’s dismissal has now sealed the fate of Kenya Power barely a month after Ministry of Energy officials also ruled out tariff increments citing the government’s commitment to cut energy costs and make the country competitive.

“They (Kenya Power) already know our position. Part of our mandate is to control energy costs for Kenyans and therefore we don’t want to burden consumers,” ERC director-general Joseph Ng’ang’a said in an interview. “Power tariffs will not go up.”

Energy PS Joseph Njoroge last month ruled out tariff increments and instead directed Kenya Power to cut system losses to grow its revenues.

Mr Njoroge said the government’s policy is to cut electricity cost, which is not in tandem with the upward tariff review requested by the utility firm.

The PS said the firm should seal electricity leakages to raise the number of power megawatts it sells to homes and businesses as a way of increasing its earnings.

The electricity distributor loses an estimated 17.5 per cent of the electricity bought from power producers such as KenGen to illegal connections and leakages from transmission lines and sub-stations.

Kenya Power is majority owned by the government, which has a controlling 50.1 per cent stake — giving it a big say in the firm’s operations.

READ: Kenya Power’s bid to charge consumers higher tariffs flops

The blocking of the proposed higher tariffs that were to come into force in July has denied the utility firm a new avenue for growing its bottom-line.

The current power tariffs were adjusted last July when Kenya Power made its first tariff cut of about Sh1 per kilowatt hour (kWh) for homes that consume more than 50 units monthly.

Low-volume consumers (using 0-50 units per month) currently pay Sh2.50 per unit and were unaffected by last year’s tariff adjustment, which was the final phase of a billing structure that was set in 2013 for implementation over three years.

Homes using between 51-1,500 units of power are paying Sh12.75 per unit while consumers of above 1,500 units pay Sh20.57 per unit.

Electricity consumers also pay a fixed charge of Sh150 regardless of consumption levels.

The fixed fee stood at Sh120 in 2012 when the government suspended a planned increase in tariffs by 25 per cent.

Reducing the cost of energy has been a key plank of President Uhuru Kenyatta’s economic agenda that is aimed at making locally produced goods competitive in local and foreign markets as well as slowing down the rate of inflation.