Kenya Power to collect Sh31bn from new tarrifsTuesday January 31 2023
Kenya Power will raise up to Sh31.4 billion more from consumers under the proposed new electricity tariff set to kick in from April.
Acting Managing Director of Kenya Power, Geoffrey Muli made the disclosures on Monday, highlighting the financial lift of the new tariff to fund the upgrading of the ageing distribution system and critical projects of the other State-owned firms in the generation and transmission of power.
The utility firm submitted the proposed tariff to the Energy and Petroleum Regulatory Authority (EPRA), setting the stage for the first upward review of retail power prices since 2018.
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Mr Muli added that the additional billions are based on the Sh157 billion in revenue that Kenya Power collected in the 2021/22 financial year.
“We are expecting to get between 15 percent and 20 percent more in revenue from the Sh157 billion that we collected last year if the new tariffs are approved,” Mr Muli said.
Besides increasing the base tariff, the threshold for accessing the monthly power subsidy has been reduced to an equivalent of a 24.1 percent discount from 100 kilowatt hours to the proposed 30 units.
Kenya Power wants to increase the cost of a unit of power for the usage of less than 30 kilowatts per month to Sh28.01 a unit, up from the current Sh20.70, reflecting a growth of 35.3 percent.
The revenue increment is based on assumptions that surcharge levies in power bills like fuel and forex adjustments will remain at the levels recorded in January.
Besides helping Kenya Power to upgrade its ageing transmission line, the billions of shillings will also inject more funds for capital and operations to the Kenya Electricity Transmission Company (Ketraco) and Rural Electrification Company (Rerec).
Kenya Power says that 64 percent of the revenue collected is used to pay Independent Power Producers and the Kenya Electricity Generating Company for electricity supplies, two percent goes to Ketraco and one percent to REREC.
Public participation on the new tariffs will kick off today with Epra expected to table the final tariff before Parliament and gazettement in Aprils.
Higher tariffs will pile pressure on households as manufacturers are expected to factor in higher costs of production and pass them through an increase in the cost of goods and services.
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New prices are likely to derail Kenya’s quest to make energy costs competitive compared with other African nations like Ethiopia, South Africa and Egypt.
The proposed tariff come at a time a host of industrial consumers and domestic customers are opting for solar energy driven by the high electricity bills and unreliability of the national grid.
Kenya Power holds that the higher tariffs are justified because the present electricity prices lapsed in 2019.