Power bills to rise slightly as regulator increases fuel levy
Energy Regulatory Commission (ERC) director-general Joseph Ng’ang’a. PHOTO | FILE
What you need to know:
ERC says an upward review was necessary to compensate a US-based geothermal company Orpower 4.
The company another unit of geothermal power in Naivasha to its capacity that was supplied to the national grid but whose rates have not yet been determined.
The fuel cost levy paid by homes and businesses in power bills has risen for the first time this year to compensate for use of an additional geothermal plant whose tariff has not been determined.
The fuel levy, which is linked to the amount of power generated from expensive diesel generators, is up to Sh2.34 per kilowatt hour (kWh) in November from Sh2.31--a rate that had remained unchanged since January.
US-based energy firm Orpower 4 added another unit of geothermal power in Naivasha to its capacity that was supplied to the national grid but whose rates have not yet been determined.
This prompted the Energy Regulatory Commission (ERC) to turn to the fuel surcharge to compensate the investor by loading an additional Sh0.03 to every unit of power consumed this month.
“We could not deny them to be in the national grid, given geothermal is cheap and they had to be paid for that,” said ERC director-general Joseph Ng’ang’a.
“Because the additional unit (plant) is not in the base tariff it’s convenient to add to FCC (fuel cost charge) as a pass through cost,” he added.
This fuel levy increment is set to marginally push up this month’s power bills. The ERC adjusts the fuel levy every month alongside the forex levy, which is linked to foreign currency expenses incurred by Kenya Power and electricity producers.
The forex surcharge has dropped marginally to Sh0.91 per unit from Sh0.92 but the drop is not enough to offset the rise in the fuel levy.
Homes and businesses consume about 800 million kWh of electricity monthly. This means the increase in fuel levy by Sh0.03 per unit and the drop in forex charge by Sh0.01 will translate to a net burden of Sh16 million on consumers this month.
Official data shows that homes consuming 200 units monthly paid Sh3,374 last month, up from Sh3,361 a month earlier, while users of 50 units paid Sh528 compared to Sh525 in September.
Power prices have a direct bearing on inflation, which hit an eight-month high of 6.47 per cent last month from 6.34 per cent in September.
Power bills also come loaded with an inflation charge that currently stands at Sh0.29 per unit and is adjusted every six months. Consumers also pay a fixed charge of Sh150 through their power bills whether they use electricity or not.
The energy regulator uses data from the previous month to calculate the monthly variables.
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