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Economy

Energy ministry denies Sh8.1bn backdated bills to power consumers

Energy and Petroleum Secretary Charles Keter addresses the press at his office in Nairobi on January 8, 2018. He denied any backdating of electricity bills or change of tariffs by Kenya Power. PHOTO | JEFF ANGOTE | NMG
Energy and Petroleum Secretary Charles Keter addresses the press at his office in Nairobi on January 8, 2018. He denied any backdating of electricity bills or change of tariffs by Kenya Power. PHOTO | JEFF ANGOTE | NMG 

The Energy ministry has denied backdating consumer electricity bills to recover Sh8.1 billion cost indicated in State-owned Kenya Power’s report that was incurred on diesel generators last year but were not factored in monthly charges.

This came after the utility firm revealed the hefty bill in its annual financial statement, explaining that it arose from increased uptake of expensive thermal power on the grid to compensate a sharp dip in hydropower production during drought.

The bill is part of the Sh10.1 billion identified as unrecovered power fuel costs in the State-owned firm’s annual statement for the year ended June 2017.

About Sh2 billion has been defrayed so far, leaving out Sh8.1 billion with Kenya Power having said early this month that the recovery of the arrears was ongoing.

This had the impact of inflating power bills, with fuel cost charge, which is tied to the amount of diesel-generated electricity on the grid, hitting a three-year high in December.

“I would like to state that there is no backdating of electricity bills for customers neither is there change in tariff,” Energy secretary Charles Keter told the press.

The ministry, instead said that the surge in fuel costs in December was caused by a blend of factors including drought, higher global fuel prices and the shutdown of a 30-megawatt geothermal plant in Naivasha’s Olkaria steam fields for routine repair.

The plant is still out and will be plugged back in next month, according to Mr Keter.

Fuel cost charge

Consumers pay a fuel cost charge through their monthly bills, which is supposed to go up when thermal power intake increases.

The levy, however, got stuck at Sh2.85 per kilowatt hour (kWh) over the four months to June despite the share of thermal power intake rising past that of hydropower in the period, indicating the government’s intervention ahead of the elections.

But the surcharge has been rising since September, hitting a three-year high of Sh4.35 per unit in December and piling pressure on homes and businesses.

The Energy Regulatory Commission (ERC) adjusts the fuel surcharge monthly to reflect the costs incurred to generate electricity using imported heavy fuel oils.

Kenya Power reckoned that customers owe it the unrecovered cash since the firm had paid the pass-through charges to power producers, including KenGen, in full but had only passed a fraction of the burden to the consumers.

The Nairobi-bourse listed power distributor does not benefit from the monthly adjustment of the pass-through costs since it only collects the revenues from customers for onward remission to power producers, leaving a neutral impact on its revenues.

Billing system upgrade

Mr Keter said that customers on postpaid meters (2.4 million) had experienced steep fluctuations in their bills at the end of 2017 since Kenya Power was upgrading its billing system, which will stop estimations in meter readings.

Postpaid customers account for 37.5 per cent of the total 6.4 million customer base.

“In the recent past, KPLC has estimated its bills resulting in variations in billings. This was notable during the new system upgrade. The new system has enabled Kenya Power to get readings easily.

"The new billing system also allows a consumer to self-read their meter and upload on an app on their phone hence enhance billing accuracy.”

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