Economy

Inflation levy in power bills hits historic high

Electricity prices have a direct bearing on the cost of living as it is used in most operations. PHOTO | SALATON NJAU
Electricity prices have a direct bearing on the cost of living as it is used in most operations. PHOTO | SALATON NJAU 

The inflation charge in electricity bills has this month hit an all-time high after the energy regulator adjusted it in step with rising costs.

The charge, which is guided by the overall inflation figures, has increased by 8.3 per cent to Sh0.39 per kilowatt hour (kWh) of power consumed in July from Sh0.36 a month earlier.

This is a record high in Kenya’s power market from a low of Sh0.05 per unit in 2009, data from Energy Regulatory Commission (ERC) shows.

There were no inflation charges before February 2009.

The inflation charge is adjusted every six months with the last review being in January that saw the surcharge rise to Sh0.36 per unit from Sh0.29 where it had remained unchanged for the whole of 2016.

Kenya’s overall inflation stayed above 10 per cent, a five-year high, since March before easing to 9.21 per cent in June.

Consumer power bills also come loaded with fuel levy and forex surcharge which are adjusted every month by the energy regulator.

The fuel levy, which is linked to the amount of power produced by diesel generators and injected into the national grid, has been retained at Sh2.85 per kWh since February.

The forex levy which is linked to foreign currency expenses incurred by the Kenya Power and electricity producers is down by Sh0.03 to Sh1.05 per unit from Sh1.08 last month.

The benefits of the drop have, however, been wiped out by the rise in inflation by a similar margin, leaving homes and businesses in a neutral position.

Homes consuming 200 units of electricity paid Sh3,633 in May while users of 50 units forked out Sh558, the Kenya National Bureau of Statistics (KNBS) data shows.
The figures for June were not made public.

Electricity prices have a direct bearing on the cost of living as homes and businesses rely on power for most of their operations.