Relief for electricity consumers as regulator retains fuel levy

The two-month rise in the cost of electricity has taken a temporary break after the industry regulator spared the consumer additional diesel charges.

The fuel levy, which is linked to the amount of power generated by diesel generators and injected into the national grid, has been retained at Sh2.85 per kilowatt hour (kWh) of power consumed in January.

The levy rose marginally in November before shooting to a 16-month high in December, piling pressure on household budgets.

Energy ministry officials have, however, warned of an impending sharp rise in the price of electricity should the drought persist, depressing dam water levels and cutting cheaper hydropower generation.

The Energy Regulatory Commission (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 levy is down by Sh0.07 to Sh0.84 per unit from Sh0.91 in December.

The benefits of the drop have, however, been wiped out by a rise in inflation by the same percentage points to 0.36 per unit in January from Sh0.29 a month earlier.

The inflation charge is adjusted every six months or twice per year. The unchanged bill will see homes consuming 200 units of electricity continue paying Sh3,497 this month, the same as December, while users of 50 units will fork out Sh558, official data shows.

Last week, Energy secretary Charles Keter warned that power bills could hit a 26-month high in March if the drought persists.

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He said that decreasing water levels in dams have cut hydropower generation, forcing the power generator to turn to increased use of thermal power, adding that the fuel levy will hit a maximum of Sh3.52 per kWh.

Mr Keter, however, ruled out power rationing as was the case in 1999-2001 when severe drought cut hydropower production resulting in painful bouts of load shedding across the country.

Because thermal power is expensive, it is only produced when there is a shortage of cheaper hydropower and available geothermal energy has been fully injected into the grid.

The drought has affected the Seven Forks hydro stations on Tana River —Kenya’s main supplier of hydropower.

Power generation at the stations has almost been halved to 6.5 million kWh daily, down from about 12 million units when the dams are full, according to power producer KenGen, the operator of the Seven Forks.

Hydropower is Kenya’s cheapest electricity source at Sh3 per unit, but its output is often depressed by erratic weather, followed by geothermal (Sh7) while thermal tops Sh20.