Kenyans will pay as much as 16.5 percent more in electricity prices this month after the energy regulator raised fuel and foreign exchange charges on the commodity in what is set to slow down the easing of the cost of living recorded in recent months.
The Energy and Petroleum Regulatory Authority (Epra) in its latest monthly power prices review this week raised the energy charge by 8.7 percent to Sh4.33 per unit up from Sh3.98 last month. The higher energy charge signals an increase in output of expensive thermal electricity last month.
The energy charge is collected by Kenya Power on behalf of thermal power generators to cover for their fuel costs. It also supports off-grid power stations that serve far-flung areas that are not connected to the grid.
The energy regulator also increased the foreign exchange rate fluctuation adjustment (Ferfa) charge by 103.7 percent to a new record high of Sh6.46 per unit up from the previous record of Sh3.17 set in last month’s review.
The higher charge is informed by the continued depreciation of the Kenyan shilling against the US dollar last month, which continues to raise the costs incurred by Kenya Power to purchase electricity from generators as well as service its dollar-denominated debt.
An analysis by Business Daily shows that lifeline customers – those who on average consume less than 30 units monthly – will see an increase of 16.5 percent in their bills this month.
Small commercial customers will incur an increase of about 16.6 percent, while domestic ordinary customers and electric vehicles charging firms will shoulder an increase of 13.4 percent and 13.8 percent respectively.
Meanwhile, big industrial customers of category C12-11 connected at 220kVA will see an increase of about 3.3 percent in their power bills, which is the lowest among all the consumer categories.
The energy and forex charge –as well as the Water Resources Authority (WRA) levy– are pass-through costs that are adjusted monthly to reflect variable costs incurred by power generators and Kenya Power to produce and procure electricity respectively.
Epra has further raised the inflation adjustment charge to 33 cents per unit up from 23 cents last month. The charge is adjusted every six months to cater for inflation.
A unit of electricity for domestic ordinary customers is therefore about Sh32 per unit, which is the highest price in the country’s recent history, and an increase from about Sh28 last month.
The jump in power prices is likely to once again exert an upward pressure on the cost of living, coming a month after inflation dropped to the lowest level in 20 months driven by lower food costs.
Inflation dropped to 6.6 percent in December – the lowest since a low of 6.47 percent in April 2022 – according to data from the Kenya National Bureau of Statistics (KNBS).
“This was mainly driven by increases in prices of commodities under transport (11.7 percent); housing, water, electricity, gas and other fuels (8.3 percent); and food and non-alcoholic beverages (7.7 percent) between December 2022 and December 2023,” said KNBS.
Month-on-month, prices of most food items including mangoes, Irish potatoes, sugar, tomatoes, wheat flour and milk dropped, pointing to the impact of the El Nino rains in December.
However, Kenyans continued to grapple with higher prices of electricity and fuel, though month-on-month, pump prices of petrol and diesel dropped by 2.3 and one percent respectively.
