The gap between what Kenya Power pays to buy a unit of electricity from power producers and the price it charges customers has widened sharply over the past two years, boosting the company’s profits.
Kenya Power disclosures show that the per-unit electricity margin —the gap between cost and price— rose nearly fivefold to Sh5.10 in the year ended June 2024, up from Sh1.05 in 2023 and Sh0.42 in 2022, fuelling the resurgence in the firm’s net profit over the past three years.
While the margin eased slightly to Sh3.58 per unit due to a slight reduction in power tariffs, the utility firm is enjoying the highest margins in over 15 years.
The increased margins, added to cost-saving initiatives and stable shilling, gave Kenya Power a record Sh30.08 billion net profit in the year ended June 2024 before this eased to Sh24.47 billion in the year ended June 2025.
Latest figures show that the average revenue per unit of electricity sold by Kenya Power was Sh20.41 in the year ended June 2025, compared with Sh16.83 per unit paid to power producers.
This follows a peak margin of Sh5.10 in the previous year, when each unit sold generated about Sh23.45 against a purchase cost of Sh18.35.
Kenya Power’s margin per unit had largely hovered under Sh1 before the setting in of a new tariff in April 2023 which increased the base consumption charge to Sh12.22 per unit from Sh10 for lifeline consumers.
The firm revised the definition of lifeline consumers to customers consuming up to 30 units a month from the previous threshold of 100 units and thereby pushed more consumers to a higher tariff.
Middle-class and small businesses that consume between 31 units to 100 units saw a 19 percent rise in tariffs to Sh26.10 and Sh26.22 per unit respectively when the tariff took effect in 2023.
The tariffs peaked in the year ended June 2025 before starting to reduce. For instance, charge per kilowatt-hour (kWh) of electricity for domestic consumers who use more than 100 units a month fell to Sh19.08 in the year to June from Sh20.58 a year ago.
The current tariffs will end in June next year to allow for a new cycle of tariffs. Kenya Power is currently preparing to submit a proposal for a new tariff to take effect in July 2026.
The sales in the financial year ended June 2025 dropped to Sh219.28 billion from Sh231.12 billion in the previous year mainly due to a reduction in tariff. However, the utility firm enjoyed a Sh5.94 billion saving in power purchase costs despite an increase in the units purchased over the period.
“The reduction in revenue primarily arose from lower foreign exchange recoveries following sustained local currency stability over the year, and a lower base tariff,” says Kenya Power in the latest annual report.
“The base electricity per unit price to consumers is reduced in tandem with the approved tariff yield reduction path.”
Commenting on the record Sh30 billion profit of the year to June 2024, Kenya Power had noted that the implementation of a “cost-reflective” tariff regime had driven up sales revenue.
The increased sales combined with reduced finance costs to deliver the record results.
Electricity prices continue to be a major concern for homes and businesses.
The last two years have also seen Parliament and the Ministry of Energy ramp up efforts to lower the cost of electricity, albeit with little success.
Parliament has proposed a raft of measures to curb the runaway power prices, key among them being a freeze on all power purchase agreements and an audit of the deals between Kenya Power and thermal power plants.
An attempt to forcibly have power producers lower the prices at which they sell electricity to Kenya Power flopped, ending hopes of steep drop in power bills.
