Kenya Power suspends plans to raise cost of electricity

Kenya Power has abandoned the quest to raise its electricity tariff to customers offering a relief to consumers who had opposed the plans

According to Kenya Power Chairperson Vivienne Yeda the board will instead pursue effective cash management processes including the collection of debt owed to the company as a substitute to raising tariffs.

Yeda who spoke during the listed firm’s annual general meeting in Nairobi argued that Kenyans are already burdened by a difficult economic environment to have Kenya Power pushing for higher tariffs.

Kenya Power had last year applied to the Energy and Petroleum Regulatory Authority to raise the electricity tariff which would have seen Kenyans pay more for electricity.

“It is the board’s view that as long as we continue on this path of effective leadership and management and customers pay their bills on time, there is no urgent need for a tariff increase,” Ms Yeda said on Friday.

The latest comes just days after President Uhuru Kenyatta set up a team to review power purchase agreements signed over the years by Kenya Power which has been making losses in the recent past.

Retired judge Aaron Ringera, Anne Eriksson (former PricewaterhouseCoopers executive), and James McFie will be among the 15 members of the team, which will be led by banker John Ngumi.

The review team will carry out its work over six months, the president said in a legal notice seen by Reuters on Wednesday, and no new contracts will be entered into during that period.

Energy consumers in Kenya often complain of high electricity charges, with some of the costs being attributed to idle capacity charges to compensate power generators for electricity generated but ultimately not used.

Kenya Power, the distributor, swung into a pretax loss of Ksh. 7.04billion ($64.44 Out of the 87.5 billion shillings cost of sales incurred during the period, 47.5 billion shillings, or 54%, was capacity charges paid to power producers, officials said.

Under the typical power purchase agreement, a power producer gets paid for any electricity produced, even if it is impossible for Kenya Power to sell it to consumers due to excess capacity and other reasons.

Kenya Power buys most of its electricity from state-controlled Kenya Electricity Generating Company (KEGN.NR).

It has also contracted numerous independent power producers, which normally require power purchase agreements before securing financing to set up generation plants.million) for its financial year to the end of last June.

Out of the 87.5 billion shillings cost of sales incurred during the period, 47.5 billion shillings, or 54%, was capacity charges paid to power producers, officials said.

Under the typical power purchase agreement, a power producer gets paid for any electricity produced, even if it is impossible for Kenya Power to sell it to consumers due to excess capacity and other reasons.

Kenya Power buys most of its electricity from state-controlled Kenya Electricity Generating Company (KEGN.NR).

It has also contracted numerous independent power producers, which normally require power purchase agreements before securing financing to set up generation plants.