El Niño rains fail to deliver promise of cheaper power
Businesses have in recent years complained that expensive power makes Kenya’s products uncompetitive. PHOTO | FILE
What you need to know:
KenGen had in December promised cheaper electricity when it announced it had increased power generation after heavy rains filled major power generating dams.
The rains were expected to increase the share of hydropower and further cut that of expensive thermal energy.
Official data indicate that homes consuming 50 units of power paid Sh542.20 last month, up from Sh521 in December last year.
The heavy El Niño rains have had little impact on power bills amid expectations that rising water levels would increase injection of cheaper hydro-power to the nation grid.
Data from the Energy Regulatory Commission (ERC) indicates that the fuel adjustment levy, which is linked to the amount of power generated from expensive diesel, for post-paid bills to be settled next month is at Sh2.31 per kilowatt hour (kWh) having remained unchanged at Sh2.51 over the past two months.
The rains were expected to increase the share of hydropower and further cut that of expensive thermal energy.
The metrological department says Kenya should brace for a hot and dry weather, signalling a rise in fuel cost levy that will ultimately increase the cost of electricity.
KenGen had in December promised cheaper electricity when it announced it had increased power generation after heavy rains filled major power generating dams. This led executives at the ERC to predict that fuel levy could fall to below Sh2 kWh.
“Hydro generation is the cheapest mode and therefore any increase in its uptake by the off taker will displace an equivalent amount of other sources from the system,” Albert Mugo, KenGen CEO said in the December notice.
“This can only result in the stability and predictability in the price of electricity to consumers”
Geothermal power is priced at about Sh7 per unit, thermal (Sh19) and hydropower, the cheapest, at Sh3. In August, the energy regulator put power utilities on the spot for not aggressively pursuing cheaper hydropower despite increased water levels in dams.
The fuel levy had hit a nine-month high of Sh3.11 per unit at the time. The ERC faulted the heavy uptake of thermal electricity and directed Kenya Power to revert to a mix that will stop the cost surge.
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 as well as slowing down inflation.
Businesses have in recent years complained that expensive power makes Kenya’s products uncompetitive.
Official data indicate that homes consuming 50 units of power paid Sh542.20 last month, up from Sh521 in December last year.
The foreign exchange adjustment, another monthly variable item on electricity bills, remained unchanged at Sh1 per kWh—reflecting the stability of the shilling against the dollar in December.
The shilling had been under pressure in the months to November on falling revenues from tourism and horticulture — key foreign exchange earners — amid concerns over a rising import bill.
The currency has been trading at about Sh102.25 to the dollar in December, up from Sh106 in September when it pushed the forex levy to Sh1.99 per kWh.
The forex levy comprises expenses incurred in foreign currency by power generators such as KenGen, independent power producers as well as Kenya Power.
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Note: The results are not exact but very close to the actual.
