Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

KenGen to benefit from ERC fund

NAIROBI, Kenya, Nov 1 – The Energy Regulatory Commission (ERC) is considering setting up a fund to cushion KenGen against penalties arising from non-delivery of power to the Kenya Power and Lighting Company (KPLC).

ERC Director-General Eng Kaburu Mwirichia told Capital Business that although no conclusive decisions had been reached, the establishment of a fund through which KenGen would be compensated in case of a drought was one of the options they were looking at.

“They (KenGen) have a minimum threshold of energy that they are required to sell every month. So when there is drought, they are not able to meet this threshold and are thus penalised,” the DG explained.

KenGen and KPLC signed a new Power Purchase Agreement (PPA) signed in 2008 which requires the generator to adjust its revenues downwards if and when it fails to supply the agreed amount of energy.

The inability to meet this obligation, occasioned by the poor rainfalls late last year, saw KenGen adjust its books by Sh1.25 billion which resulted in a 47 percent decline in its profitability for the full year ended June 2010.

Eng Mwirichia however said that although the agreement provides for the revision of some contentious issues, the ERC had not received any official application for a review.

“They have not approached us but it is something that we are aware of. During the signing of the agreement, we agreed that after three years there are some issues which may be re-looked at because we shall have had experience,” he explained.

But as the ERC continues to mull ways of addressing the hydrology risks, the DG disclosed that they were also looking at how other issues such as the introduction of the ‘time of use electricity billing’ would be implemented.

The Commission has forwarded to KPLC a proposal on how it should execute the electricity billing program which involves shifting power loads out of peak demands periods.

Advertisement. Scroll to continue reading.

Eng Mwirichia revealed that KPLC was in talks with industrial companies under the umbrella of the Kenya Association of Manufacturers to develop mechanisms on how they can implement the method which promotes better energy use.

The utility company in the past failed to implement the strategy due to what industry players said was the lack of a clear structure on how to go about it.

“We had asked them to try on a sample basis so they are working on a program on how to try that before we can know whether we can implement it on a permanent basis,” he said adding that they intended to have the program implemented before the next PPA review in 2011.

By having some industries operate their machines outside the peak time of 8am, the firms would not only assist in reducing the energy peaks but would also lower the overall cost of generation.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...