Kenya power plans to change its pricing model in order to cushion itself from future losses.
In the proposed model the power distributor will start selling electricity at prices calculated and based on full cost recovery.
This follows Kenya Power's submission of a retail tariff application to the Energy & Petroleum Regulatory Authority (EPRA) for review.
Retail tariff is the price at which electricity is sold to different customers but excludes bilateral tariffs in a power purchase agreement and power supply agreements.
EPRA is set to conduct public hearings on the same as stipulated by the constitution.
“In accordance with Section 165(3) of the Energy Act, 2019, KPLC has submitted for review a Retail Tariff Application to the Energy & Petroleum Regulatory Authority. The proposed application is for the 2022/23-2025/26 tariff control period,” the energy sector regulator said in a notice
Last year EPRA asked KPLC to submit a retail tariff application to accommodate the revenue requirement of new independent power plants that had joined the grid.
These include Selenkei and Cedate power stations in Eldoret, Malindi Solar, Kipeto Solar, Olkaria V and Kianthumbi Power.
Kenya Power presented the regulator with a tariff review application in which it projected that the non-fuel component of the tariff will go up from Sh16.95 per unit by 12.3 percent in 2022/23.
The tariff will further increase by 11.3 percent in 2023/2024, 7.15 in 2024/25 and 5.86 in 2025/26.
Under the IPP model followed by Kenya, every merchant power plant that comes on board brings its revenue requirements.
“EPRA will be conducting national public consultation hearings with a view of sensitising the public on the tariff application and providing a fair chance of participation to all stakeholders,” the notice by EPRA continued.
The Authority will thereafter review the application in accordance while considering the views collected from the public.
The last time Kenya Power made an electricity tariff application was in 2018. The application was not granted.
The new application comes less than two months after the energy sector regulator directed all firms and producing power exceeding 1Mw to seek fresh licences.
