ELECTRICITY COST

Prepaid customers to wait longer on Uhuru’s power reduction promise

EPRA working on a billing formula.

In Summary

•Government keen to bring down the cost of power by 30 per cent.

•Reduction will be implemented in two tranches of 15% each; with the first one being reflected in the December bills. A further 15% reduction expected in Q1 2022.

A prepaid Kenya Power customer keys in token numbers in Loresho, Nairobi/
A prepaid Kenya Power customer keys in token numbers in Loresho, Nairobi/
Image: ENOS TECHE

Households with pre-paid meters may have to wait longer to enjoy the government’s pledge of bringing down the cost of power by 30 per cent.

This, even as Kenya Power moves to actualise the first tranche of a 15 per cent reduction on power bills, with huge costs that could dent its capital on the offing.

While President Uhuru Kenyatta had promised consumers a power reduction before Christmas, a billing system that would be used to adjust downwards the power bills is yet to be formulated.

The Energy and Petroleum Regulatory Authority (EPRA) is currently engaging stakeholders before a gazette notice is put up.

This could take up to January according to insiders, where power producers selling electricity to the utility firm (Kenya Power) are being involved.

This means consumers of 50Kwh will remain within the margins recorded in November where they paid Sh921.43, which was higher compared to same month last year , when it cost Sh806.37–Kenya National Bureau of Statistics inflation data shows.

This was however a reduction from October this year’s bill of Sh925.08.

Last month, consumers of 200Kwh paid Sh5,089.31 down from Sh5,103.91 in October.

The same volume was at Sh4,629.07 in November last year, meaning consumers have had to dig deeper into their pockets this year to access electricity.

“Prices of electricity (50 kilowatts) and electricity (200 kilowatts) decreased by 0.39 per cent and 0.29 per cent, respectively,” KNBS says in its latest Consumer Price Index update, in reference to this year’s month-on-month changes.

During his Jamhuri Day address, President Uhuru noted that as a result of the government pledge to bring down the cost of power by 30 per cent the reduction of the cost of electricity will be implemented in two tranches of 15 per cent each; with the first one being reflected in the December bills.

A further 15 per cent reduction is expected in the first quarter of 2022.

This is expected to be achieved through initial actions focusing on system and commercial losses.

In fulfilment of this pledge, Kenya Power on Thursday said the first 15 per cent reduction in the cost of power will be implemented on power consumption in the month of December, 2021.

“ This will be reflected in power bills covering that period, which, as is normal practice, will be sent to consumers in the following month, in this case January 2022,” management said in a statement.

“Kenya Power remains committed to working with all stakeholders to provide clean, affordable, reliable and accessible power to all Kenyans which will undoubtedly bring down the cost of living and improve Kenya’s competitiveness as the region’s industrial hub,” it added.

BALANCING ACT

The country’s power distributor however has a tough task in the actualization of the reduction.

This is after a push to renegotiate contracts with Independent Power Producers (IPPs), which will have seen a reduction in the purchase prices by Kenya Power, faced headwinds.

The IPPs who are owned by powerful institutions like the World Bank are reported to have opposed the unilateral push to lower the cost at which they sell electricity to Kenya Power.

This means Kenya Power will have to deal with issues such as system losses to sustain the reduction in power costs.

In February, the company launched a loss reduction initiative dubbed ‘The War Room’ to spearhead system loss reduction initiatives.

A raft of measures instituted by the War Room team included ensuring timely metering of customers, fast-tracking replacement of faulty meters, targeted inspection of meters to establish their integrity, addressing post-paid billing and prepaid meter vending issues, and preventing electricity theft through meter bypasses and illegal connections.

“In addition, we also carried out a preventive maintenance programme targeting Identified transformers,” it notes in its financial statement for the year ended June 30.

From these efforts, the company managed to reduce system losses, which had risen to 25.21 per cent in the first half of the year to 22.7 per cent in the second half, culminating in an overall system efficiency of 76.1 per cent as at end of June 2021.

The company made strides in addressing billing anomalies, faulty meters and unmetered supplies.

In addition, it carried out preventive maintenance works on 58 per cent of its distribution transformers under the Okoa Transformer Initiative.

The company has over the years seen increased illegal connections, meter bypasses and faulty meters among others, which have contributed to increase in system losses.

It is estimated that the company loses about 80 per cent of expected revenue due to illegal connections in the informal settlements of Mathare, Mukuru and Kibera in Nairobi.

Illegal electricity connections cause overloads on transformers which compromise the quality and reliability of power supply to legally connected customers, while posing safety concerns.

“We will step up revenue protection activities to enhance system efficiency by cracking down on illegal connections in partnership with the National Government, deploying the use of data analytics to curb electricity theft by commercial customers, intensifying inspections to address meter bypasses, and by expediting the replacement of faulty meters,” management has affirmed.

Kenya Power currently has more than 8.3 million customers with its biggest revenue stream on power sales being post-paid (Sh105.3 billion), mainly industries.

Pre-paid customers gave the company Sh20.6 billion in the financial year ended June 30.

The government has in recent months pushed for a reduction on power bills as part of initiates to attract investors and drive industrialisation.