October power bills set to rise on higher forex levy
Electricity consumers queue to pay bills at the Kenya Power offices in Nakuru. PHOTO | FILE
What you need to know:
The forex levy, which is linked to foreign currency expenses incurred by Kenya Power and electricity producers, is up from Sh0.84 per kilowatt hour (kWh) to Sh0.92 or Sh0.08 more.
Electricity bills will this month rise for the first time since July due to an increase in foreign exchange surcharge, piling an extra burden of Sh64 million on homes and businesses.
Industry data shows that the forex levy, which is linked to foreign currency expenses incurred by Kenya Power and electricity producers, is up from Sh0.84 per kilowatt hour (kWh) to Sh0.92 or Sh0.08 more.
The levy had dropped in July for the first time this year and remained unchanged in August and September.
The Energy Regulatory Commission (ERC) adjusts the forex levy every month alongside the fuel cost charge, which is linked to the amount of power generated from expensive diesel and supplied to the national grid.
The fuel levy will this month remain unchanged at Sh2.31 per unit, where it has been stuck since January.
Homes and businesses consume about 800 million kWh of electricity monthly. This means the increase in forex levy by Sh0.08 per unit translates to a burden of Sh64 million on consumers.
The ERC reviews the two surcharges every month alongside a charge associated with hydro-electric power generation whose proceeds go to the Water Resource Management Authority (Warma), the agency in charge of water.
The hydropower levy has remained unchanged at Sh0.025 per unit and has a negligible impact on consumer power bills.
Official data shows that homes consuming 200 units monthly paid Sh3,361 in September, same as in August, while users of 50 units continued to pay Sh525.
Power prices have a direct bearing on inflation, which rose to 6.34 per cent last month from 6.26 per cent in August.
Power bills also come loaded with an inflation charge that currently stands at Sh0.29 per unit and is adjusted every six months. Consumers also pay a fixed charge of Sh150 through their power bills whether they use electricity or not.
The ERC every month receives power consumption data from electricity distributor Kenya Power to review the fuel cost levy, forex charge and Warma levy. The energy regulator uses data from the previous month to calculate the monthly variables.
Kenya relies on an energy mix comprising geothermal, hydropower and thermal sources.
Hydropower is Kenya’s cheapest power source at Sh3 per unit but is unreliable since it is dependent on weather.
Geothermal power is priced at about Sh7 per unit while diesel-generated power (thermal) tops Sh20.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
