Kenyan consumers and businesses are bracing for a fresh spike in electricity costs following a new tariff adjustment by the Energy and Petroleum Regulatory Authority (EPRA).
In its latest regulatory review, the energy watchdog has introduced a foreign exchange fluctuation adjustment of 110.33 cents per kilowatt-hour (kWh), alongside a revised water resource levy, to account for volatile economic factors.
According to a Gazette Notice published by the regulator, the new forex surcharge is designed to cushion power producers and distributors against mounting currency risks. Rapid fluctuations in the exchange rate have saddled sector players with over Ksh. 1.17 billion in foreign exchange losses, primarily linked to power purchase agreements with KenGen and Independent Power Producers (IPPs).
In addition to the forex buffer, the updated pricing structure incorporates a Water Resource Management Authority (WRMA) levy applied directly to hydropower generation. These two charges will be layered on top of the standard base tariffs and the fluctuating fuel energy cost charge.
Key factors driving the price increase
- Forex Shock: A cumulative Ksh. 1.17 billion loss incurred by power distributors due to shifting currency dynamics.
- Hydro Levies: The reintroduction of updated water usage fees for hydro-generation plants.
- Fuel Costs: Continued reliance on thermal and diesel plants to plug generation gaps during peak periods.
EPRA maintains that the monthly adjustments are unavoidable. The regulator stated that passing these generation and currency expenses directly to the consumer is a critical step in preserving the financial health of Kenya’s energy supply chain.
Unfortunately for Kenyans, the government does not seem interested in shielding Kenyans from rising costs and is quick to pass on every single cost to them.