Power prices fall further as fuel levy hits four-year low
What you need to know:
At Sh3.47, the fuel surcharge – which is responsible for steep electricity bills – is trading at levels last seen in October 2010.
This will cut electricity prices by about 10.2 per cent for homes that consume about 50kWh and 6.8 per cent for middle class households that use 200 units of power monthly.
The falling electricity prices will ease pressure on inflation, which stood at 6.43 per cent last month, down from 6.6 per cent in September and 8.36 per cent in August.
The cost of electricity has dropped further this month after a fuel surcharge levied on power bills dropped to a four-year low.
Data from the Energy Regulatory Commission shows fuel cost adjustment, which is linked to the amount of power generated from expensive diesel-driven generators, dropped to Sh3.47 per kilowatt hour (kWh) for bills to be settled at the end of the month from Sh4.79 in October and Sh7.22 in August.
This is the result of cheaper fuel and injection of additional geothermal power into the national grid, with 140 megawatts having been added to the grid in late July and the second tranche of 70 megawatts added on September 16.
At Sh3.47, the fuel surcharge – which is responsible for steep electricity bills – is trading at levels last seen in October 2010.
This will cut electricity prices by about 10.2 per cent for homes that consume about 50kWh this month to Sh580.78 compared to Sh800.15 in August – representing a 27.4 per cent drop since the injection of the 140MW of geothermal power in late July.
Middle class households that use 200 units of power monthly expect will see their bills drop by 6.8 per cent to Sh3,807.81 compared to Sh4,685 in August – an 18.7 per cent drop.
The foreign exchange fluctuation adjustment cost, however, increased to Sh0.30 per kWh from Sh0.23 in October and Sh0.17 in September.
A wobbly shilling and heavy dependence on diesel-powered generators to produce electricity due to low water levels in hydro-electric dams had been blamed for the rise in fuel surcharge and forex adjustment costs.
But the impact of expensive thermal power on power bills is set to be diminished with Kenya’s ambitious plan to inject additional geothermal power to the grid.
Last month, the share of electricity generated from geothermal sources for the first time surpassed that of hydro power.
ERC data indicated that geothermal power accounted for 38.85 per cent of the 754.8 million units of electricity bought by homes and businesses in September while hydro power accounted for 36.7 per cent. Thermal power accounted for 22.2 per cent.
In August, the share of geothermal power stood at 31.66 per cent while hydroelectricity was at 37.7 per cent. Thermal power was at 28.8 per cent.
The falling electricity prices will ease pressure on inflation, which stood at 6.43 per cent last month, down from 6.6 per cent in September and 8.36 per cent in August.
Kenya has a target to halve electricity bills next year from present levels of between Sh15-Sh16 per kWh. Diesel generation costs about Sh30 per kWh while the cost of geothermal power ranges between Sh7.12 and Sh8.01 per KWh, the government says.
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