April power prices hit 30-month high

A Kenya Power worker at the Labour Day fete in Nairobi on May 1, 2017. PHOTO | SALATON NJAU
A Kenya Power worker at the Labour Day fete in Nairobi on May 1, 2017. PHOTO | SALATON NJAU 

Electricity prices have hit a 30-month high, returning consumers to levels last seen before the country added 280 megawatts of cheaper geothermal power to the national grid.

Official data shows homes that consumed 200 kilowatt hours (kWh) paid Sh3,700 last month compared to the October 2014 peak when power prices hit their peak of Sh3,931 and November cost of Sh3,641.

Users of 50 units of electricity paid Sh590 in last month’s power bills compared with Sh554 in November 2014 and gained more than Sh30 since the start of the year. It stood at Sh502 in January 2015.

Kenya injected 280 megawatts of cheaper geothermal energy to the grid between July and December 2014, leading to reduced use of expensive diesel generated power that lowered electricity bills.

But increased use of expensive thermal power as poor weather cuts input of cheaper hydro power to the national grid and weakening of the shilling is erasing the benefits of the cheaper geothermal power.

“The increase observed in the cost of electricity was mainly attributed to higher foreign exchange adjustment of electricity consumed in April,” said the Kenya National Bureau of Statistics.

The Energy Regulatory Commission raised the forex levy by 37.5 per cent to Sh1.32 per kWh of electricity consumed in April from Sh0.96 per unit a month earlier.

The levy is adjusted every month to reflect the prevailing forex rate.

The charge compensates for foreign currency costs, including loans that State-owned Kenya Power #ticker:KPLC and private electricity generators have in their books — making Kenya one of the few African states with dollar-denominated power bills.

Increase in the cost of electricity is expected to add to the inflation pressure that has been rising since late last year and entered the double digit territory in March driven by high food and prices.

The lower water level in the country’s hydro-electric dams due to drought has also seen power bills remain high because of sustained use of expensive diesel-powered generators as an alternative.

The fuel levy, which is linked to the amount of power generated by diesel generators and injected into the national grid, has remained unchanged at Sh2.85 per unit of power since December. This is a 16-month high.

Because diesel-generated power is expensive, it is only produced when there is a shortage of cheaper hydropower and available geothermal energy has been fully injected into the grid.

A review of power prices shows that bills have increased 16.8 per cent over the past five years from Sh3,094 (200 kWh) in December 2012 to Sh3,700 last month, contrary to the government’s assertion that the costs are down.