Economy

Kenya Power to compensate users for blackouts under new Bill

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Kenya Power technicians repair power lines. PHOTO | FILE

Summary

  • The amendment of the Energy Act will see the power utility compensate consumers for financial losses and physical injuries due to power outages.
  • Manufacturers, commercial building owners, warehouses, farmers and other small businesses like salons and barber shops all use electricity and an extended outage usually translates to losses and additional expenses from using generators.
  • Claims from these businesses could see Kenya Power pay hundreds of millions of shillings as compensation.

Businesses whose power is cut off for more than three hours within a day will receive compensation from Kenya Power if a proposed law is adopted.

The amendment of the Energy Act will see the power utility compensate consumers for financial losses and physical injuries due to power outages.

The country suffers from frequent blackouts due to supply shortfalls and an aging infrastructure, forcing most businesses and wealthy customers to have stand-by generators.

Kenya Power will be expected to include the compensation in power bills and use it to offset future electricity bills, says the proposed law sponsored by Abdulswamad Nassir (Mvita MP).

“A licensee shall be liable to compensate a consumer due to power outages or surges… that exceed a cumulative three hours within a 24-hour period,” says the Bill.

“Where a consumer incurs financial loss, the licensee shall compensate the consumer by incorporating the compensation into the consumer’s bill by way of a subsidy which shall, be an equivalent amount to the loss incurred as presented by the consumer and agreed by the licensee.”

Those who suffer physical injuries will be offered compensation determined by the court. The International Energy Agency (IEA) last year said that Kenyan households and factories are plunged into darkness for an average of 25 days every year due to blackouts.

Kenyan homes and industries experience more than 600 hours of outages per annum compared to 120 hours or five days per year in South Africa, according to IEA’s report titled Africa Energy Outlook 2014.

Kenya Power plans is spending billions of shillings to upgrade its transmission network and curb the blackouts as the country prepares to add 5,000 megawatts (MW) to the existing 2, 298 MW of generation capacity by 2017.

The Kenya National Chamber of Commerce and Industry (KNCCI), said more electricity distribution companies should be licensed to end the monopoly enjoyed by Kenya Power which many observers blame for the inefficiency.

Manufacturers, commercial building owners, warehouses, farmers and other small businesses like salons and barber shops all use electricity and an extended outage usually translates to losses and additional expenses from using generators. Claims from these businesses could see Kenya Power pay hundreds of millions of shillings as compensation.

The proposed law is intended to spur a faster response from the power utility in the event of outages. The IEA said that the power utility lost about 5.5 per cent of annual power sales, which translated to Sh3.4 billion for the period to June 2014.

“Those without a generator are left without electricity during outages,” said IEA in the report, “which results in lost business opportunities.”

The unreliable power supply has also dimmed investor confidence. Kenya Power had a target to spend Sh156 billion in the five years to 2018 to expand its electricity distribution network to keep up with growing demand.

The listed utility has instead had to contend with increasing customer connections, particularly in rural areas. It has added nearly one million customers to the grid in the last one year. It had 3.7 million customers by the end of June 2015 which translates to 47 per cent access.

It has an annual customer connectivity target of one million that would see it achieve universal access in the next five years.