Electricity users to pay more as levies hit record highs

Consumers face a double-barrelled increments in their August power bills after the energy regulator moved to significantly raise fuel and currency fluctuation levies.

The Energy Regulatory Commission (ERC) has adjusted fuel cost on electricity consumed in August upwards to Sh3.11 per unit, from Sh2.51 in June — the highest since last November — indicating increased use of diesel generators despite recent heavy rains and high geothermal power injected into the national grid.

Similarly, the forex levy has also increased to a 28-month high of Sh1.49 per unit, up from last month’s ShSh0.89 per unit.

The adjustment, the highest since May 2013, marks the fourth consecutive upward monthly adjustment to cover the cost of the weakening shilling.

Overall, the latest adjustments by the ERC mean that consumers will be paying Sh1.20 more per unit of electricity consumed.

This is set to burden consumers more as the ERC is also expected to raise petroleum prices on Friday, incorporating the Sh3 shilling roads levy increment per litre and effects of the weak shilling.

Officials said that insufficient rains had denied consumers cheaper electricity because inadequate water in key dams has depressed low-cost hydro power generation.

READ: Weak shilling ups electricity forex levy to 18-month high

The share of thermal power was expected to drop further with the help of the rains that would have lifted the contribution of hydro power priced at Sh3 per unit (three US cents) compared with Sh19.3 per unit ($0.19) paid to thermal generators. The tariff for geothermal is Sh7.1 per unit ($0.07).

Kenya injected 280 megawatts of geothermal power into the national grid between August and December, which has cut electricity costs by nearly a third since August, but households have seen little changes compared to 15 months ago due to the higher tariffs awarded to Kenya Power in July last year.

The fuel levy has been dropping from a peak of Sh7.22 per unit in July 2014 to Sh2.31 in June this year before rising to this month’s level.

The share of electricity generated from geothermal plants in October for the first time surpassed that of hydropower.

About 140 megawatts was added to the national grid in late July, 70 megawatts in September and 70 megawatts in early December to bring the total to 280 megawatts.

The additional geothermal power has significantly helped to curb the rise in the fuel charge.

But the weak shilling has offset the benefits of lower bills, bringing to reality the impact of the volatile currency on households’ budgets.

The shilling has been trading at three-year lows in recent months due to falling hard currency revenues from tourism, tea and horticulture — the key foreign exchange earners — amid a rising import bill.