Poor families pay more for power as the wealthy benefit

Electricity prices for low-income homes increased five per cent over the past year in a period that saw wealthy and middle class consumers enjoy drops in costs of the utility.

Official data indicate that consumers using 50 kilowatt hours (kWh) paid Sh534 last month compared with Sh508 in the same period last year, representing a rise of Sh26 or Sh5.1 per cent.

Homes consuming 200 kWh paid Sh58 less last month at Sh3, 398 in the period under review, saving big domestic consumers of electricity millions of shillings.

Electricity distributor Kenya Power in July last year cut its tariffs that affected only consumers of more than 50 units monthly, offering rich homes respite while leaving costs for the poor unchanged.

Homes using between 51-1,500 units saw their power costs cut to Sh12.75 per unit from the Sh13.68 while those consuming above 1,500 units currently pay Sh20.57 per unit, from Sh21.57.

Electricity bills take up a larger portion of rich households’ expenditure compared to the poor households, meaning a cut in tariffs could translate to huge savings for affluent consumers.

READ: Kenya Power makes first ever tariff cut

Low consumers of electricity (0-50 units per month) will continue paying the Sh2.50 a unit that was introduced in December 2013, up from Sh2.
The current tariffs are expected to be reviewed this July.

The government has been unable to deliver cheaper power to homes despite the injection of 280 megawatts of cheaper geothermal energy to the grid in late 2014.

Official data show that power costs are higher this year compared to early 2014 when Kenya relied on expensive thermal and hydro power
Households consuming 50 kilowatt hour paid Sh515 in February, 2014, which is cheaper than the current rate of Sh534.

Homes consuming 200 units paid Sh3, 398 in February, Sh607 more compared to Sh2, 791 paid in the same month in 2014.

Higher tariffs awarded to Kenya in mid-2014 and upward review of taxes have kept electricity bills high and wiped out the benefits of cheaper geothermal power.

This is a damning statement for the Jubilee administration that has been calling on businesses to transfer the benefits of the “rock-bottom” electricity prices to consumers in the form of lower product costs.

Businesses have in recent years complained that expensive power makes Kenya’s products uncompetitive. But the additional geothermal helped curb the rise in the fuel charge, which peaked at Sh7.22 in August 2014, and a further escalation in billings. The fuel charge stood at Sh2.31.

The share of electricity generated from geothermal is nearly at par with that of hydro.

Data provided by Energy Regulatory Commission show that geothermal power accounted for 47 per cent of electricity bought by homes and businesses in January, from 14 per cent in December 2013.

The share of hydro power stood at 39 per cent, down from 46 per cent in the period under review while that of thermal dropped to 11 per cent from 37 per cent.