Relief as fuel levy in power bills falls

The fuel cost levy in November electricity bills has dropped to the lowest level in eight months on reduced use of expensive thermal power, offering hope for reduced electricity bills.

Energy and Petroleum Regulatory Authority (EPRA) data shows that fuel cost charge (FCC) levy — which is influenced by the share of electricity from diesel generators —dropped to Sh3 per kilowatt hour (kWh), down from Sh3.30 last month.

The last time FCC was below this level was in April at Sh2.75. The Sh3 charge took effect on Friday, offering some relief for consumers in a period that also saw foreign exchange fluctuation adjustment drop to five-month low of Sh0.14.

Expensive thermal power

The decline in FCC comes at a time the share of expensive thermal power in the national grid has reduced to 13.4 percent, the lowest in three years as government turns to more green energy sources such as geothermal and wind.

This is in contrast with 2017 when thermal had a share of 26.46 percent in the national grid. It fell to 16.5 percent last year. It was at a high of 34.49 percent in 2014 owing to erratic rains that reduced hydro power source.

Consuming more electricity from green sources is supposed to result in lower bills given that wind power is priced at Sh8 per Kwh (kilowatt hours) compared to thermal energy, which costs about Sh15 per Kwh.

Official data for eight months to August 2019 shows that the level of thermal power generated dropped 15.6 percent to 1,014 Gigawatt hours (GWh) as wind and solar power production was stepped up.

The combined share of wind and solar energy to the grid rose to 15.5 percent from last year’s 0.34 percent, majorly boosted by 310 megawatts (MW) from Lake Turkana Wind Power project and 54.6 MW from Garissa solar plant.

This has cut the share of thermal energy in national grid for the second straight year to 13.4 percent of the 7,572 GWh total local electricity produced in eight months.

Geothermal is the biggest accounting for 44.12 percent of electricity generation mix at 3,341 GWh, while hydro comes in second at 26.98 percent with 2,043 GWh.

Kenya is, however, still stuck with expensive thermal power purchase agreements whose termination could attract up to Sh9 billion, according last year’s estimates by the Energy ministry.

The first contract ends in 2023 while the longest one expires in 2031.

This could see consumers wait longer for much more cheaper bills despite thermal usage having declined.