Epra defers hearings on proposed electricity tariff to June

The Energy and Petroleum Regulatory Authority has postponed public hearings on a proposed electricity retail tariff plan for the 2026-27 to 2028-29 financial years, pushing the consultations to June amid growing public concern over the cost of energy.

In a public notice issued on Monday, the regulator said the consultative forums, which had been scheduled to commence on May 25, would no longer proceed as planned.

The new schedule will begin on June 15 and run through June 24 in various parts of the country.

The June hearings will provide an important platform for Kenyans to understand how energy pricing works and influence future tariff measures that will affect every household, business and economic sector.

The postponement comes at a time when households, manufacturers, transport operators and businesses are increasingly focused on the cost of electricity and fuel, two sectors whose pricing structures are more closely linked than many consumers realise.

Electricity retail tariffs do not directly affect retail fuel pump prices but global fuel costs dictate the final retail electricity tariff.

Under the revised schedule, consultations for the Lake Region Economic Block will be held at Sarova Imperial Hotel in Kisumu on June 15, followed by the North Rift Economic Block forum at Eldoret National Polytechnic on June 16.

Stakeholders from the South Rift Economic Block will meet at Sarova Woodlands Hotel and Spa in Nakuru on June 17, while those from the Mt Kenya and Aberdares Economic Block will convene at FK Resort in Nyeri on June 18.

The Nairobi meeting covering non-regional counties and the South Eastern Kenya Economic Block has been scheduled for June 19 at Sarova Stanley Hotel.

Consultations for the North Frontier Economic Block will be held at North Eastern National Polytechnic in Garissa on June 22, while the final forum for Jumuiya ya Kaunti za Pwani will take place at the Kenya School of Government in Mombasa on June 24.

The hearings will examine a proposed electricity retail tariff application covering the fifth tariff control period, a framework that determines how electricity prices are structured and charged over a multi-year cycle.

While the tariff reviews are often viewed solely through the lens of monthly power bills, electricity tariffs and fuel prices operate in a complex cause-and-effect relationship in which movements in one sector often influence costs in the other.

Higher electricity tariffs indirectly contribute to fuel price pressures by increasing the operating costs of businesses throughout the petroleum value chain.

Fuel storage facilities, service stations, warehouses, manufacturing plants and logistics operators all depend heavily on electricity.

When power costs rise, these enterprises incur higher expenses in running pumps, refrigeration systems, lighting, security infrastructure and other critical operations.

To preserve profit margins, some of those costs are eventually passed on to consumers through higher prices for goods and services, including petroleum products.

The effect is also felt in transportation and distribution networks. Key petroleum infrastructure, including pumping systems used in fuel transportation, requires significant electricity input.

Rising electricity costs therefore increase expenses within the supply chain, contributing to the broader cost environment considered during fuel pricing assessments.

The relationship also works in reverse, often more directly and visibly. Under Kenya's electricity pricing framework, EPRA reviews several variables each month when determining electricity charges.

Among them is the Fuel Energy Cost Charge (FECC), a mechanism that allows fluctuations in fuel costs used for power generation to be reflected in consumer bills.

Whenever international diesel prices increase, thermal power producers face higher generation costs. Since thermal plants continue to play an important role in stabilising electricity supply during periods when renewable generation is constrained, rising fuel costs translate into increased production expenses.

Those additional costs are subsequently passed through to consumers via the FECC component of electricity bills.

Exchange-rate movements further complicate the picture. Many power producers procure fuel and equipment using the US dollar.

When the shilling weakens or global petroleum prices surge, producers experience increased operating costs and foreign-exchange losses.

Regulatory adjustments are then made within the tariff structure to account for those fluctuations.

The forthcoming public hearings therefore arrive at a particularly sensitive moment for the energy sector globally.

The world continues to grapple with elevated fuel prices linked to the crisis in the Middle East, where direct military confrontations involving the United States, Israel and Iran have intensified uncertainty across global energy markets.

The Strait of Hormuz, regarded as the world's most important oil transit corridor and responsible for the movement of roughly one-fifth of global petroleum supplies, has remained heavily militarised amid escalating tensions.

Concerns over potential disruptions to shipping lanes, insurance costs and freight movements have injected significant risk premiums into international oil markets.

Even when physical supplies remain available, traders often factor geopolitical uncertainty into pricing, pushing crude oil prices higher and increasing costs across the global supply chain.

For countries such as Kenya, which import all refined petroleum products, those developments have immediate domestic consequences.

The May fuel review sparked widespread public anger after substantial increases in pump prices raised transport and production costs across the economy.

The resulting backlash culminated in a nationwide transport strike that disrupted movement and businesses in several urban centres.

In response, the government unveiled a series of interventions aimed at cushioning consumers from the impact of rising global oil prices.

President William Ruto announced that the government had deployed more than Sh15.72 billion from the Petroleum Development Levy Fund during the May-June pricing cycle to stabilise fuel prices.

The intervention included a Sh10 reduction on diesel prices to ease pressure on public transport operators, manufacturers, farmers and logistics companies.

The government has also maintained reduced Value Added Tax on petroleum products at eight per cent, significantly below the standard rate of 16 per cent, as part of efforts to moderate pump prices.

Last week, the President further directed that diesel prices be reduced by another Sh10 per litre in the June-July review cycle, arguing that the measure would provide additional relief to consumers and businesses affected by rising operating costs.

Against this backdrop, the postponed electricity tariff hearings take on greater significance than a routine regulatory exercise, as beyond fulfilling constitutional and statutory requirements for public participation, the forums provide consumers, businesses, manufacturers, civil society groups and energy experts with an opportunity to interrogate proposed tariff adjustments before they are implemented.

Participants will be able to question assumptions used in the tariff application, scrutinise cost projections, challenge proposed charges and present alternative views on how electricity should be priced over the coming years.

The consultations also offer a rare opportunity to bridge the information gap that often fuels public frustration whenever energy prices rise.

Many consumers encounter fuel and electricity costs only as figures on a receipt or monthly bill, without understanding the global market forces, exchange-rate pressures, generation costs, taxation policies and infrastructure expenses that shape those prices.

A deeper public appreciation of those dynamics may not eliminate dissatisfaction when costs rise, but it can foster a more informed national conversation.