Higher electricity costs in the offing

April 9, 2008
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, NAIROBI, April 8- Kenyans should brace themselves for higher power tariffs, experts have warned.

This follows an application by the Kenya Power and Lightning Company (KPLC) to the Energy Regulatory Commission (ERC) to have the retail tariffs reviewed so as to mitigate against increased power purchase costs and other operating expenses.

Currently, the highest cost paid by consumers per kilo watt hour is Sh13.80.

In its submission to the ERC, the power company requested that the new tariffs become effective on July 1st.

In a quick rejoinder, ERC told a press briefing Tuesday that it was processing Power Purchase Agreement (PPA) proposals received from both KenGen and the KPLC and it would be adjusting them before July.

“We will be releasing new power tariff structures within the next three months,” the commission’s Director General Eng. Kaburu Mwirichia disclosed.

KenGen and KPLC have been trading under an Interim Power Purchase Agreement (IPPA) since 1999.

He however declined to give estimates of how much the increment would be saying all those details would be released once the ERC made its recommendations.

“We cannot give the figures until the commission gives its approval,” he maintained.

The PPAs determine the bulk power tariffs which will be used to develop retail rates.

Mwirichia assured that the commission would try to balance the interests of all stakeholders including the public, whom it would protect against market forces.

Emphasizing the ERC’s pledge to apply prudence and transparency during the exercise, the Director General added: “ERC will execute this duty without favour or bias.”

He said the tariffs would be based on proposals from a study conducted by a German consulting firm Fichtner on power tariff structures in the country.

A report from the study, which was contracted by the then Electricity Regulatory Board (ERB), was released in early 2007.

During the same meeting, the Director General reiterated the government’s commitment to increase electricity supply so as to meet the growing demand, which is projected to grow to1,153Megawatts (MW) by mid 2008.

His remarks came days after the Energy Minister Kiraitu Murungi announced new tariffs for electricity generated from wind, biomass and small-hydro resources.

It also came against a backdrop of revelations that the country’s reserve capacity has reduced from an average of 11 percent to a meagre three percent.

With a generation capacity of 1,185MW it remains to be seen whether the country can handle the proposed plan of a 24-hour economy.

 

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