Forget it, energy bills will be way costlier

July 30, 2018 Newsroom

Energy tariffs review in Summary:

Energy Regulatory Commission (ERC) has increased the energy tariffs by more than four times.
The 1st 10 units (KWh) of energy consumed by domestic consumers will cost Sh12 each up from Sh2.5
For the next 40 units (Kwh) KPLC will earn Sh15.80 per unit, up from Sh2.5
Domestic consumers who consume up to 1500 units per month will now pay the Sh15.80 per unit for every extra unit consumed from the 51-1500 unit.
Street lighting will now cost Sh7.5 per unit up from Sh4.36 per unit

Do not be fooled, power will be way costlier. The devil is always in the detail.

On Monday, the Kenyan government through its energy regulator, the Energy Regulatory Commission (ERC) increased the energy tariffs by more than four times but clothed the message in public relations language that will only be realized when consumers actually see their monthly bills.

Read the full ERC press release here

Through the new tariffs, the ERC has punished even the small time consumer and massaged the blow by dropping the monthly Sh150 fixed charge to hoodwink consumers that the energy costs will be cheaper.

According to the new energy tariff that is backdated to take effect from July 1, the first 10 units (KWh) of energy consumed by domestic consumers will now cost Sh12 each from Sh2.5 previously charged. This means that for the first ten units, one will now part with Sh120, up from the Sh25 previously.

For the next 40 units consumed by a domestic user, Kenya Power will now earn Sh15.80 per unit, up from Sh2.5 previously charged. This means that in this band once again, a user will now pay Sh632 instead of Sh100 charged previously, which is an increase of more than 600 percent.

There is no respite for domestic consumers who consume up to 1500 units per month given that they will now pay the Sh15.80 per unit for every extra unit consumed from the 51-1500 unit. It is only after the 1500^th unit that there will be a small relief for domestic consumers who will continue paying the standardized pay Sh15.80 down from the Sh20.57 they were paying previously.

But then there are very few domestic consumers who use more than 1500 units a month and besides one will have already paid more for the earlier units consumed so the relief will not translate into any saving.

For the small commercial consumers, the Sh150 fixed charge has also been scrapped. But that is where the party stops. For the first 15,000 units consumed by the small commercial consumers – those who operate small shops and outlets such as kiosks, small supermarkets, barber shops, butcheries and so on, one will have to part with Sh15.80 per unit up from the Sh13.5 they were paying previously.

It means that for instance, if your monthly consumption was 100 units, one will now pay Sh1,560 compared to Sh1350 they were paying for the same number of units. This is a 15 percent increase. The more the units consumed, the higher the amounts, until the 15000^th unit is consumed. The trend is almost the same for all the other categories of energy consumers all the way down to commercial or industrial consumers and street lighting.

For instance, street lighting will now cost Sh7.5 per unit up from Sh4.36 per unit. It is only the big manufacturers and power consumers who consume bulk power that will see a significant saving when they adjust their production plans to use power at night when the rest of the country is asleep, power that goes to waste anyway.

In his statement, the ERC Director General Pavel Oimeke said the commission had approved an increase in the revenue requirement from Sh120billion to Sh131billion.

“This will meet energy purchase costs and allow for system expansion and maintenance,” ERC said.

In its breakdown, ERC said the overall unit cost of power will reduce from Sh17.87 to Sh16.64 per KWh representing an overall reduction of costs by 6.9 percent.

“The domestic consumer lifeline tariff which is meant to cushion the low-income households whose consumption will not exceed 10 units per billing period, who at the moment constitute 3.6million of Kenya Power customers, will reduce by between 36 percent and 82 percent.”

ERC said commercial and industrial customers on average will get a reduction of 4.4 percent in addition to the 50 percent discount in the time of use tariffs.