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THERMAL ENERGY

Power consumers to pay more as diesel prices soar

Kenya Power is forced to source more electricity from Independent Power Producers (IPP'S) that mainly rely on diesel powered thermal turbines.

In Summary

• Kenya Power is now charging Sh3.75 per kilowatt up from Sh2.75 set in March.

A prepaid Kenya Power customer keys in token numbers in Loresho, Nairobi county, April 25,2018. /ENOS TECHE
A prepaid Kenya Power customer keys in token numbers in Loresho, Nairobi county, April 25,2018. /ENOS TECHE

The rising global oil prices and unpredictable rainfall pattern could see electricity consumers in Kenya pay more on expensive thermal production.

On Tuesday, the Energy and Petroleum Regulatory Authority (EPRA) announced a Sh2.24 increase on a litre of diesel, citing high landing cost that rose 2.75 per cent from $624.25 to $641.51.

Prices of other fuel products including Super petrol and kerosene also went up by Sh5.43 and Sh2.40 respectively as a barrel of crude oil crossed $70 in international market.

Kenya Power is forced to source more electricity from Independent Power Producers (IPP'S) that mainly rely on diesel powered thermal turbines.

The electricity retailer  normally buys electricity from the IPP's at an average wholesale price of Sh19.24 ($0.19) per unit, with cost passed to consumers.  

The diesel rate is six times more expensive than hydro-power (Sh3 per unit) and three times higher than geothermal energy (Sh8). 

Recent data from EPRA shows that fuel levy — which is influenced by the share of electricity from diesel generators —rose to Sh3.75 per kilowatt hour (kWh), up from Sh2.75 set in March.

According to the regulator, the Sh3.75 charge took effect late last week for pre-paid consumers with postpaid users set to feel the pinch starting next month.

"Pursuant to clause 1 of Part III of the Schedule of Tariffs 2018, notice is given that all prices for electrical energy specified in Part II of the said Schedule will be liable to a fuel energy cost charge of plus 375 Kenya cents (Sh3.75) per kWh for all meter readings to be taken in June, 2019,’’ the regulator said in a notice.

A consumer who paid Sh200 to a Kenya Power was given 11.9 units amounting to Sh11.07. Tax took Sh26.67, Warma Sh0.14, EPRA Sh0.35, forex  0.23, inflation Sh2.97 and fuel index Sh44.62.

A total of Sh44.62 for 11.9 kilowatts means that each unit was charged at Sh3.749.

The one shilling jump in fuel cost charge in May is the highest in two years after similar margin was witnessed in November 2017. The new levy is 100 percentage points shy from Sh4.79 recorded in October 2014.

The increase in fuel prices is likely to push further the fuel levy charge on power bills, hitting hard especially domestic consumers who in February saw a spike in power bills after being categorised in two tariffs, Domestic Lifeline and Domestic Ordinary.

The Lifeline category comprises of those who consume less than 100 units a month averaged for three months, while Ordinary consist of those who consume more than 100 units over the same period.