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Increase in forex charges sends power cost surging

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

Consumer power bills have increased for the first time in four months in July due to higher foreign exchange expenses and inflation charge, despite last month’s pledge by the State to cut the cost.

The Energy regulatory Commission (ERC) indicated that forex charge in July power bills rose to Sh1.22 per kilowatt hour (kWh) from last month’s Sh1.11.

The charge compensates for foreign currency costs, including loans that power producers have in their books and is tied to forex exchange.

Inflation charge, which is adjusted every six months, is now up to Sh0.52 per unit, from Sh0.42 when it was last reviewed in January. The ERC had last month pledged an eight per cent drop in power bills from this month, with the coming into effect of a new power tariff structure that is under public discussion.

Consumer bills also come loaded with a fuel levy, which is linked to the amount of power produced by diesel generators and supplied to consumers. It has dropped marginally by Sh0.15 to Sh4.60 per unit of electricity consumed in July.

The drop was, however, not sufficient to offset the increases in inflation and forex levies whose impact had a net raise of Sh0.06 per unit of power. This will see homes and businesses pay Sh53 million more in July based on the country’s average consumption of 890 million units per month.

Electricity prices have a direct bearing on inflation as it is one of the items in the basket of goods and services whose pricing is tracked to measure the cost of living. Kenya’s overall inflation rate hit 4.28 per cent last month from 3.95 per cent in May.

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