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Forex levy pushes up power bills to record peak in April

A Kenya Power employee inspects a meter box. FILE PHOTO | NMG
A Kenya Power employee inspects a meter box. FILE PHOTO | NMG  

Power bills have risen for six months in a row and will hit a historic peak this month due to a sharp increase in forex levy, squeezing budgets of consumers already reeling from steep bills.

Forex charge, which compensates for foreign currency costs, including loans that power producers have in their books, is up 50 per cent to Sh1.44 per kilowatt hour (kWh) of electricity consumed this month, according to data from Energy Regulatory Commission (ERC).

This is set to further raise power bills to a new all-time high after months of steady increments since last October.

Power bills for homes that consume 200-kilowatt hours (kWh) per month, mostly middle class, jumped five per cent last month to a new high of Sh4,262 — one the fastest monthly growth among basic household items.

The pain also caught up with bottom-end power users whose bills surged seven per cent last month to cross the Sh700-mark for the first time.

The low-income earners — consuming 50 units of electricity a month — paid Sh730 in March, up from Sh682 a month earlier, official data shows.

The ERC adjusts the forex levy in power bills every month, along with a fuel cost charge, which has remained unchanged at Sh5.35 per unit — a 42-month high.

The fuel levy is linked to the amount of power produced by diesel generators and supplied to consumers. It has shot up in recent months due to increased intake of expensive thermal power to compensate for a sharp dip in hydropower production as a result of a drought.

The rise in forex levy by Sh0.49 per unit will translate to an additional burden of more than Sh415 million this month, based on the country’s consumption levels and electricity levies.

Electricity prices have a direct bearing on inflation, being one of the items in the basket of goods and services whose pricing is tracked to measure the cost of living.

Electricity distributor Kenya Power does not benefit from the monthly adjustment of the pass-through costs since it only collects the revenues from customers for onward remission to electricity producers, leaving a neutral impact on its revenues.

Kenya recorded steady drops in power bills from 2015 following the injection of additional 280 megawatts of cheaper geothermal energy into the grid between July and December 2014. This led to reduced use of expensive diesel-generated power and lower fuel levy in power bills.

But the bills have been on an upswing recently due to a spike in the intake of expensive thermal power as poor weather cuts production of cheaper hydropower, erasing benefits of the cheaper steam power.

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