Electricity prices have declined by 22.3 percent in the nine months to September, data shows, driven by lower foreign exchange and fuel costs.
For instance, a domestic ordinary customer who paid Sh1,841 for 50 units in January is now paying Sh1,429 for the same quantity in September, data by Kenya Power shows.
This translates to a reduction of Sh412, helping ease living and business costs for consumers.
During the period, the cost of a unit of electricity dropped from an average of Sh37 in January to about Sh29 in September. The decline has been driven by a strong shilling, which has decreased power purchase costs.
The strong shilling has seen the foreign exchange rate fluctuation adjustment component of power bills cut by 84 percent to just Sh1.03 per unit this month down from Sh6.46 in January.
Kenya Power’s Power Purchase Agreements are denominated in foreign currency mainly the US dollar and euros. This means that when the shilling weakens, power purchase costs skyrocket.
On the back of the strong shilling, which has gone from record lows of Sh163 against the US dollar in January to about Sh129 this week, consumers are incurring lower power purchase costs.
The heavy rainfall that pounded the country in the first half of the year and led to record-high hydropower production has also lowered power prices. It led to a decline in the fuel energy cost component of the power bill to Sh3.43 per unit, down from Sh4.33 in January.
Hydro is the cheapest source of power in Kenya. The average hydro tariff is $0.0533/unit. It is followed by wind, which has an average tariff of $0.0894. Independent Power Producer geothermal is $0.0923, geothermal from kenGen has an average tariff of $0.0943, while thermal is the most expensive tariff at $0.166/unit.
But amid the decline in power prices, the reliability of supply has become a major issue, thanks to numerous nationwide outages that have rocked the country in recent months.
