Consumers living outside the 600-metre radius of a transformer will pay more to connect to the power grid, Energy and Petroleum secretary Davis Chirchir said on Monday.
Mr Chirchir gave Kenya Power the go-ahead to carry out cost analysis for long-distance connections even as consumers continued to complain of delays in connection, setting up households and businesses for higher charges to access electricity.
However, the government said charges for single-phase connections located within the set range should remain at the current rate of Sh34,980, pending a study to establish the actual cost of linking to the grid. A three-phase connection costs Sh49,080.
“Those outside the 600-metre radius will be costed; otherwise Kenya Power should continue connecting (rest) at current rates,” said Mr Chirchir at a press briefing on Monday.
“We are running a study to confirm the cost of connection and the report will be out in a month.”
The government last month rejected Kenya Power’s bid to double the connection charge to Sh70,000 saying it would lock out homes and entrepreneurs from getting electricity.
Two weeks ago, Deputy President William Ruto stopped the firm from raising electricity tariffs, instead directing it to sort out operational inefficiencies and power losses.
(Read: Ruto stops Kenya Power from raising electricity costs)
Kenya Power has been levying a fixed charge for electricity connections under the subsidised rates introduced in 2004 as a strategy to deepen access to electricity.
This new directive by the Energy minister means that Kenyans living outside the set area could be forced to dig deeper into their pockets to get electricity.
The higher charges will be an obstacle towards achieving power connection to the last mile —poor rural households — and could slow down government target to have 40 per cent of Kenyans access electricity by the year 2020.
As a result, Kenya Power has been adding an average of 25,000 users to the grid every month, helping double its customer base in the last four years to the current 2.1 million.
(Read: Kenya Power freezes new power connections)
But the utility firm argues that the current charges set nine years ago need to be reviewed as they have been overtaken by inflation and market trends.
“Since then, the costs of materials, labour and transport have significantly increased progressively,” Kenya Power said in its tariffs review application to ERC in February this year.
“Kenya Power proposes that this deficit is partly raised through a charge to electricity consumers of Sh0.70 per KWh and upward adjustment of the connection fees.”
The firm says the cost of copper and aluminium cables have more than tripled and transformer prices doubled while fuel costs are up 47 per cent and poles 45 per cent.
As a result, Kenya Power has been left to absorb the difference in connection charges and actual costs which has grown threefold in the last three years to Sh7.5 billion in the year to June 2012.
“Kenya Power has shown us their costs, but we want to confirm this through a study,” said Mr Chirchir adding that the government does not want to saddle consumers with unnecessary costs.
“We must get the right price for our power to attract investors and be competitive globally.”
Kenya Power wanted to more than double electricity prices for domestic users consuming less than 50 kilowatts per month, who were to pay Sh5.10 per kilowatt-hour from the current Sh2.00/kWh.