Middle class miss out on electricity bills cut

The Energy Regulatory Commission (ERC) has locked out middle-class homes from reduced electricity tariffs that take effect today in a review it says will cushion millions of poor homes from the spiralling cost of living.

The energy regulator yesterday raised the lifeline (subsidy) threshold to 100 kilowatt-hour (kWh) from 10 units it set in July, cutting power bills for low-income households and small-sized businesses.

The tariff review three months ago increased electricity bills for middle-income households by as much as 54 per cent.

The ERC said electricity bills for households and businesses consuming a maximum of 100 units of power will fall by as much as Sh7.02 per unit or 31.63 per cent compared with October after factoring in variable pass-through charges such as 16 per cent valued added tax (VAT), fuel cost charge, forex levy and inflation charge.

The amended new non-fuel tariff structure, the regulator said, will see homes incur a monthly bill of Sh1,517 in November for 100 units of power, 31.63 per cent less than Sh2,219 in October, with VAT and adjustable costs expected to largely remain unchanged.

An estimated 516,977 middle-income homes that on average consume more than 100 units of power monthly will, however, not benefit from the reduced tariffs, the regulator said.

Kenya Power, the near-monopoly power distributor, has been directed to classify customers based on their monthly electricity consumption, the ERC said.

“They already have your consumption data from the time you joined the (pre-paid) system up to now. So we already know whether you belong to 0-100 units category or above 100 units,” ERC deputy director for pricing Cyprian Nyakundi said.

“If you have been consuming more than 100 units, it can only change if you consistently consume less than 100 units for more than three months to be migrated to the lifeline tariff category.”

The State-controlled Kenya Power #ticker:KPLC has shut down its prepaid billing system for 14 hours from midnight to 2 p.m. today to facilitate implementation of the newly adjusted electricity tariffs.

“Our customers on pre-paid system will not be able to vend for electricity tokens during the shutdown, which is expected to last 14 hours until tomorrow afternoon (November 1, 2018, 2pm),” the firm said in a statement.

Middle-class households were among the hardest hit in the July billing structure review, with their monthly power costs rising sharply despite repeated government pledges to lower electricity costs.

ERC director-general Pavel Oimeke said yesterday’s review will cushion more than 5.7 million low-income homes from the high cost of living and another 177,089 small-sized businesses from higher operating costs.

Poor households and businesses consuming a maximum of 100 kilowatt-hour (kWh) will pay about Sh7.02 less per unit when VAT and adjustable costs are factored, lowering the rate to Sh15.17 per unit from Sh22.19 in October, the ERC said.

The downward review follows President Uhuru Kenyatta's directive to the regulator on October 16 to lower power tariffs for small and medium-sized enterprises (SMEs) within a month.

The directive followed public outcry over increased power costs burden in a country whose poverty levels were estimated at 36.1 per cent of the total population as at June 2016.

The Kenya National Bureau of Statistics’ (KNBS’) Basic Report on Well-Being in Kenya established that about 16.4 million Kenyans were living on less than Sh5,995 monthly income in urban areas and Sh3,252 in rural and peri-urban areas.

“The commission has also put into consideration the views of the public on power bills post July 2018,” Mr Oimeke said at a news conference yesterday, adding that further views came from legislators in National Assembly and the Senate.

“With the threshold of the lifeline category set at 100kWh, the commission has been able to capture 91.73 per cent of the domestic customers hence covering all the low-income households according to statistics from KNBS.”