Economy

Power prices set to rise as forex charge jumps 57pc

power

Persistent drought has cut hydro power production. FILE PHOTO | NMG

Electricity prices will rise this month driven by a 57 per cent increase in forex charge in power bills. The higher costs come after a reprieve last month when prices fell.

The forex levy, which compensates the Kenya Power and electricity producers for foreign currency costs, rose to Sh1.01 per kilowatt hour (kWh) of electricity consumed in October, from Sh0.64 per unit last month.

The levy hit a six-year high of Sh2.35 per unit in August, sending monthly bills to record levels.

READ: Consumers set to gain as power bill falls by a fifth

The Energy Regulatory Commission adjusts the levy every month to reflect the prevailing forex rate and energy firms’ foreign currency-dominated bills.

The charge compensates electricity distributor Kenya Power #ticker:KPLC , and producers such as KenGen #ticker:KENGEN for foreign currency costs, including hard currency-denominated loans they have in their books.

The rise in the forex levy means homes and businesses will pay about Sh300 million more this month, based on Kenya’ average monthly consumption of about 830 million units. The shilling has shed 0.4 per cent over the past one month to trade at Sh103.22 yesterday against the US dollar, according to the Central Bank of Kenya.

READ: Electricity prices surge to 6-year high on forex levy

Consumer power bills also come loaded with a fuel levy, which like the forex surcharge, is adjusted every month.

The fuel surcharge has remained unchanged at Sh3.35 per unit in October, a 34-month high.

The higher fuel levy, which is linked to the amount of power produced by diesel generators and injected into the national grid, indicates more use of thermal power to compensate for a drop in hydro power production due to drought.