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By law, the total costs of providing generation, transmission and distribution are recovered from the customers through a tariff framework.
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The tariff framework is composed of three components; the Base Tariff; Pass-through Costs; and Taxes and Levies.
Image: EPRA TWITTER
The Energy and Petroleum Regulatory Authority has denied reports that it added illegal electricity levies resulting in the over-billing of power consumers.
EPRA assured stakeholders that it ensures that only prudently incurred costs in power generation, transmission and distribution are recovered from consumers.
By law, the total costs of providing generation, transmission and distribution are recovered from the customers through a tariff framework.
The tariff framework is composed of three components; the Base Tariff; Pass-through Costs; and Taxes and Levies.
“The authority is mandated by law to balance the interests of the consumers and investors and to ensure the security of power supply and sustainability of the sector,” EPRA director general Daniel Kiptoo said in a statement.
The statement by EPRA comes hot on the heels of a report by the Auditor General which showed Kenya Power overcharged consumers by Sh23.17 billion in the year to June 2023.
Auditor General Nancy Gathungu has questioned the legality of the charges.
There were reports that EPRA added illegal levies to its monthly fuel surcharge.
However, Kenya Power managing director Joseph Siror downplayed the findings insisting that the company was allowed to collect those amounts.
EPRA is empowered by Section 11(c) of the Energy Act, 2019 to set, review and adjust electric power tariffs and tariff structures, and investigate tariff charges, whether or not a specific application has been made for tariff adjustment.
In the statement, Kiptoo explained that between the last tariff review to the current review effected in April 2023, seven new power plants were commissioned with a total capacity of 502MW.
He named them as Olkaria V (158MW), Olkaria I Unit 6 (83MW), Kipeto Wind Power (100MW), Selenkei (40MW), Cedate (40MW), Malindi Solar (40MW), Alten Solar (40MW) and Kianthumbi Small Hydro (0.5MW).
Kiptoo noted that effective April 2023, there was a tariff review for the period 2023/2024, 2024/2025 and 2025/2026, which now included generation costs of the eight plants not included in the previous Base Tariff.
“In effect, there is no over-billing. The approved tariff now includes the costs of power plants commissioned between October 2019 to March 2023,” EPRA boss said.
The Base Tariff comprises the cost of generation, transmission and distribution that utilities like Kenya Power and Lighting Company, Kenya Electricity Generating Company, Kenya Electricity Transmission Company, Rural Electrification and Renewable Energy Corporation, Geothermal Development Company and Independent Power Producers incur in the provision of the regulated services.
These costs are calculated based on the existing generation contracts, operation and maintenance contracts and the cost of finance associated with the provision of these services.
The Base tariff is set at the prevailing exchange rate and a prevailing Consumer Price Index that represents core inflation.