Task force named in bid to tame high cost of electricity

Tariffs paid to independent power producers (IPPs) will be reviewed in a fresh effort to lower the cost of electricity paid by homes and businesses.

The Ministry of Energy on Tuesday named a task force to review Power Purchase Agreements (PPAs) between Kenya and electricity generators to eliminate contracts that burden consumers.

This follows a directive from President Uhuru Kenyatta to review power contracts inked to benefit plants owned by private investors.

The injection of additional cheaper geothermal power has failed to lower electricity bills when the current cost of power is compared to 2013 levels—when home and businesses were still complaining of expensive energy.

Now, the government wants to look to bulk tariffs signed between producers and Kenya Power with the intention of pushing the electricity distributor to lower consumer energy costs.

“This review is not only confined to the existing PPAs, but will also include a review of tariff for on-going negotiations between Kenya Power and power plants,” Energy secretary Charles Keter said Tuesday while introducing members of the task force.

Members of the task force are drawn from the Energy sector, National Treasury, State Law Office, Kenya Private Sector Alliance (Kepsa), Kenya Association of Manufacturers (KAM), university dons as well as energy regulation and commercial law experts.

READ: Kenyatta orders audit of thermal plants amid high cost of power

Energy secretary Charles Keter said the task force is expected to hand over its findings by end of December.

Middle income households consuming 200 kilowatt-hours are currently paying Sh3,361 or Sh16.80 per kWh, up from Sh2,783 or Sh13.97 a unit in April 2014 — an increase that is mainly attributed to heavy uptake of thermal power.

The bills have remained high despite the government spending billions of shillings to inject additional power to the national grid.

Expensive power is cited as one of the reasons behind the relocation of manufacturers to other countries.

Despite being able to woo key global service and technology firms, Kenya has failed to attract significant manufacturing investments.

In July, Mr Kenyatta threatened to end government contracts with some IPPs saying they were engaging in cartel-like behaviour while burdening consumers with higher bills.

“I believe there has been a lot of cloud around signing agreements with IPPs that has cost the country heavily,” he said during an energy summit at State House, Nairobi. “Those arrangements that are not cost-effective to Kenyans must be terminated, in a legal way, in the shortest time possible,” he added.