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Economy

Fuel cost charge hits highest level since 2014

An employee inspects a power line. FILE PHOTO | NMG
An employee inspects a power line. FILE PHOTO | NMG 

The fuel charge in electricity bills has jumped to a three-year high this month, further increasing power costs for homes and businesses in an economy where petroleum prices are trading at highest levels since 2014.

The Energy Regulatory Commission (ERC) says the fuel cost charge in power bills for November has increased to Sh4.35 per kilowatt hour (kWh), up from Sh3.35 per unit last month.

This is the highest level since October 2014 when the fuel surcharge—which is linked to the amount of power produced by diesel generators and adjusted monthly-- stood at Sh4.79 per kWh.

The foreign exchange fluctuation adjustment cost dropped by Sh0.19 to Sh0.82 per unit in November, meaning that consumers will pay an extra Sh0.89 that will raise overall power bills by about Sh680 million.

Heavy reliance on diesel-powered generators to produce electricity due to low water levels in the country’s hydro-electric dams has been blamed for the rise in fuel surcharge and forex adjustment costs.

“We had poor hydrology in previous months that depressed hydropower generation and so thermal power had to come in to compensate for that,” said ERC acting director-general Pavel Oimeke.

“But hydrology is now picking up with the ongoing rains and we expect to experience cost drops in coming months.”

Electricity prices have been rising from last month and the latest increase is expected to put pressure on inflation, which in October dropped to 5.72 per cent from 7.06 per cent the previous month, pushed down by a fall in some food items.

Housing, water, electricity, gas and other fuels carry an 18.30 per cent weighting in the basket of goods used to measure inflation.

Fuel prices this month climbed to a three-year high, raising transportation and industrial production costs.

Official data shows that homes that consume 200 kWh a month paid Sh3, 751 last month, up from Sh3, 665 in September.

Users of 50 units of power, mostly low-income earners, paid Sh603 last month, up from Sh581 a month earlier.

Kenya has in recent years struggled to cut reliance on expensive thermal power in favour of cheaper geothermal and hydropower. But poor rains have depleted water dams.

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