Kenya Power to recover Sh6.5bn tariff gift via bills


Kenya Power and Lightning Company (KPLC) Managing Director Joseph Siror. PHOTO | FRANCIS NDERITU | NMG

The Energy and Petroleum Regulatory Authority (Epra) has given nod to Kenya Power to recover from consumers the Sh6.5 billion revenue it lost when President William Ruto’s government offered a temporary tariff cut extension months after ascending to office.

Kenya Power has disclosed in the latest annual report that it has received clearance to get back the money that it missed out when President Ruto offered Kenyans a three-month extension of the 15 percent tariff cut that his predecessor had offered for a year.

The recovery of the amount, foregone for three months, has the potential of increasing the power bills for its more than 9.2 million customers in an environment where prices have been rising due to higher fuel costs, currency depreciation and the review of electricity tariffs.

Retired President Uhuru Kenyatta offered Kenyans a one-year 15 percent tariff cut running from January to December last year, with Kenya Power getting compensation from the government.

The Ruto administration extended the tariff cut by a further three months until April 1 this year but did not provide any mechanism for Kenya Power to be compensated for the cut—a loophole that has come back to haunt consumers.

“Unlike the preceding 12 months period of reduction for which interventions to cover the deficit had been provided, there was no intervention for the extended period,” says Kenya Power in the annual report.

“This amount has now been confirmed by Epra and is scheduled to be recovered through pass-through mechanisms.”

This will prove to have been an expensive present from Dr Ruto as Kenya Power, which already reviewed upwards its tariff in April, starts deducting the money from consumers.

Domestic consumers are currently paying about Sh33.10 per unit of electricity up from Sh26.29 in December or 26 percent higher but Kenya Power does not give a detailed breakdown of the costs.

Kenya Power’s audited report was signed by the board on October 26 and it is not clear if the utility firm has already started deducting customers the amount and how long it is going to take.

The Nairobi Securities Exchange-listed firm in March started hiding a breakdown of charges on electricity bills, making it difficult for customers to assess the pass-through costs.

The practice continues despite summons by Parliament and the promise by Epra to prevail upon Kenya Power to reinstate a detailed breakdown of the bill when one purchases power through its prepaid system.

The transaction messages would show the money spent on what, the units received, how much going towards actual energy bought and other costs, including value-added tax (VAT), fuel cost charge and forex charge.

Other costs that were included in the breakdown are the charges covering rural electrification, Epra, the Water Resources Management Authority, and inflation adjustment.

Currently, Kenya Power only shows customers the tokens code, date of purchase, units received, money used on the tokens and money spent on what it summarises as “other costs,” leaving consumers in the dark about what exactly they are paying for.

The one-year tariff cut, which cost Sh26 billion, saw Kenya Power forego an annual revenue of Sh7.8 billion, KenGen (Sh3.5 billion), Ketraco (Sh500 million) while Geothermal Development Corporation relinquished Sh346 million.

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Note: The results are not exact but very close to the actual.