Kenya Power will lose its monopoly in electricity distribution and retail in the country if the amended Energy Bill tabled in the parliament is passed in its current form
The proposed Energy Bill 2017 want other distributors and retailers licensed in what is likely to end Kenya Power’s monopoly in the industry, promising homes and businesses a choice and better quality of service.
“A retail license authorises a person to supply electricity to consumers through a series of commercial activities including procuring the energy from other licensees, inspection of premises, metering, selling, billing and collecting revenue,” reads the Bill.
It also provides for sector regulators to set the minimum capital required to enter the power distribution and retail business. The plan is to restrict retail licensees to a particular area or areas stated in the license.
This is the second time the bill is coming to parliament after President Uhuru Kenyatta in October 2016 asked Mps to remove a clause that demanded Kenya Power to compensate customers for losses resulting from electricity blackouts
The draft bill is likely to attract opposition especially the government and power generators even as consumers celebrate , terming it as a step in the right direction
Speaking to The Star yesterday, Consumer Federation of Kenya (CoFeK) secretary general Stephen Mutoro welcomed the proposal, saying that liberalization of the electricity market will ensure good service delivery and competitive prices for consumers. He however want power distribution talks to go beyond legislation and focus on quality services
To make power distribution cost effective, the energy sector must be made competitive. I ideally, every county should have its own power distribution firm. It is however one thing to legislate and other one to make situation better,'' said Mutoro
If the proposed draft is passed by parliament and signed into law, Mutoro want new distributors and retailers given financial incentives to make massive investment. He also want the Kenya Power to undertake right-sizing in order to cut on its current costs and upgrade its technology for better service delivery
The government is however adamant the power retail market cannot be opened up until a clear framework is put in place and transmission network developed.
Last year, Energy permanent secretary Joseph Njoroge told journalists that market liberalisation is only feasible upon the expiry of Kenya Power’s long-term contractual agreements with producers.
Kenya Power has power purchase agreements with producers including KenGen of up to 25 years which may be interrupted in case other distributors are brought on board.
''The ministry reckons that market liberalisation would see Kenya Power default on its contractual obligation of buying specified amounts of power from producers since the entry of other players would eat into its retail market share,'' said Njoroge
KenGen declined to comment on the impact of the impending bill on the agency's business, so did Energy Regulatory Authority
''Am waiting to see if the bill is approved before I comment,'' said ERC director general Pavel Oimeke
Other proposals in the bill includes giving counties the power to develop energy-conservation building codes to suit local conditions and creation of Consolidated Energy Fund to smooth volatility in gasoline and electricity prices
The bill also want local communities around power-producing geothermal wells to receive five percent of the revenue from royalty payments under the proposed law.
County administrations are to get 20 percent on the condition the amount doesn’t exceed twice the budget allocations from national government