Economy

Electricity output hits historic high

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Technicians repair power lines. FILE PHOTO | NMG

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Summary

  • The latest figures from the Energy and Petroleum Regulatory Authority (Epra) show that power producers such as KenGen increased their supply to Kenya Power to 1.058 billion kilowatt-hours (kWh) in March.
  • The March figure is an 11.8 percent rise from 946.09 million kWh that was supplied in the previous month and now jumps above the previous record supply that had been set last October.

Electricity generators increased production to an all-time high last month, exposing homes and businesses to the burden of paying for idle electricity amid depressed consumption.

The latest figures from the Energy and Petroleum Regulatory Authority (Epra) show that power producers such as KenGen increased their supply to Kenya Power to 1.058 billion kilowatt-hours (kWh) in March.

The March figure is an 11.8 percent rise from 946.09 million kWh that was supplied in the previous month and now jumps above the previous record supply that had been set last October.

Payments for idle electricity is a pass-on cost to consumers. The take-or-pay clause in contracts signed between government and power producers compels Kenya Power to buy the agreed amount of electricity regardless of whether or not the utility needs the energy.

Increased supply of electricity at a time that Covid-19 has subdued demand piles pressure on Kenya Power to sell.

Last year, the power distributor failed to sell about 24.26 percent of the power or 2.817 billion kWh it bought from generators like KenGen.

Over the last seven years, the firm’s customer base has jumped 3.3 times to 7.6 million but consumption has been lagging.

The excess generation has been a major concern for Kenya Power, which has to pay for the electricity generated even when there is no market to sell it.

Consumption recovered from May last year but at a slower pace than the rising supply from power generators, leading to a surge in idle power.

The March supply is for instance 41.5 percent higher than the 748.44 million kWh that Kenya Power sold to consumers in the previous month.

A majority (26) of the 42 power producers raised their March fuel prices used in electricity generation —usually passed to bills—to send fuel cost charge per kilowatt-hour to Sh3.14 from Sh2.56 in December. Kenya Power will be counting on the outcome of the team that was recently picked by the State to renegotiate power purchase agreements signed between it and electricity generators.

The rising idle power, coupled with system losses that are above the 19.9 percent that the regulator allows Kenya Power to pass into the bills of customers, has seen the power monopoly’s performance drop.

Kenya Power’s liquidity position has come under increased pressure given that obligations have remained constant mostly due to the nature of power-purchasing contracts.

Its liabilities had, at end of June, outstripped short-term assets by Sh74.5 billion, putting it in a difficult position to honour obligations such as a 40-day window for paying electricity suppliers.