Electricity prices will from next week increase by up to 63 per cent after the energy sector regulator approved higher tariffs by Kenya Power, which targets to raise more money to fund the upgrade of its ageing distribution systems.
In the first review of power tariffs since 2018, the Energy and Petroleum Regulatory Authority(Epra) has raised base power prices to Sh12.22 per unit from Sh10 for those consuming below 30 units, a 22.2 per cent jump.
It has put further pressure on consumers using between 30-100 units by increasing the cost from Sh10 to Sh16.3, a 63 per cent increase, effective April.
Those consuming more than 100 units of electricity will now pay Sh20.97 per unit up from Sh15.8 currently, a 32 per cent increase.
“With a view of meeting the social policy objective, the Lifeline Tariff band has been reduced from 100-kilowatt hour(kWh) per month to 30kWh, to cushion and address the needs of low-income households in the society,” Epra said.
“Accordingly, these consumers will be cross-subsidised by the other consumer categories in order to protect the vulnerable members of society. Despite this reduction, the Lifeline Tariff band will account for 6.3 million customers, representing 71.31 per cent of the total number of consumers. This covers a majority of the vulnerable sector base also known as ‘Hustlers’,” the regulator added.
More revenues for Kenya Power
The new tariffs are slightly lower than what Kenya Power had submitted for review and approval in October. Kenya Power’s request would have seen electricity prices rise by up to 73 per cent.
The newly approved tariffs will see Kenya Power net Sh177 billion in revenues in the current 2022/2023 financial year — some Sh18 billion lower compared to the Sh195 billion the utility firm had targeted in its initial application to Epra.
Based on the new tariffs, Kenya Power will net Sh184.9 billion, Sh189.6 billion, and Sh193.7 billion in revenues for the financial years 2023/24, 2024/25 and 2025/26 respectively.
“This will meet energy purchase costs and allow for system expansion,” Epra said.
Impact on consumers
The review by Epra will however have a positive impact on various customer categories with the street lighting tariff bracket set for the greatest cost reduction of Sh1.88kWh by 2025/25 compared to the current rates.
Commercial and industrial consumers will realise on average a reduction of Sh1.15 per kWh with Epra saying “this will help spur economic activities of the manufacturing industries and in turn lower cost of goods”.
In the new tariff schedules, the domestic customer tariff category has been classified into domestic lifeline where consumption ranges up to 30kWh; domestic ordinary 31-100kWh, and domestic ordinary where consumption is above 100kWh.
Similarly, the small commercial tariff category has been designated into small commercial (0-30kWh); small commercial (31-100kWh), and small commercial where consumption is above 100kWh.
“Domestic lifeline customer category will realise a reduction of four per cent in the end user bills. This represents approximately 6.4 million customers. The small commercial 1 customer category will realise a reduction of four percent in their end-user bills,” the regulator said.
“Domestic ordinary 1 customer category consuming between 30-100 and small commercial 2 customer category consuming between 30-100 will have an increase of 19 percent in their end-user bills,” it added.
Epra said for those in the domestic ordinary 2 category who consume above 100 units and small commercial 3 customer category, those consuming above 100 units in a month will have an increase of 14 per cent and 11 per cent in their end-user bills.
“The proposed tariffs will safeguard the financial sustainability of the sector by ensuring Kenya Power meets its power purchase and financial obligations. It will also ensure improved service delivery by scaling up refurbishment and upgrade of transmission and distribution system,” the regulator said.
