Electricity Prices Set to Rise Slightly in October Due to Forex Adjustments

Kenyan households should brace for a modest increase in their electricity bills this October, as the Energy and Petroleum Regulatory Authority (EPRA) has approved new pass-through costs. This adjustment comes amidst ongoing concerns about the rising cost of living in the country.

Lines of digital electricity meter of rent house

Key Highlights:

New forex adjustments will increase electricity costs from Ksh103.32 to Ksh114.89 per kWh.
Households consuming between 30 and 100 units of electricity will feel the pinch the most.
For every Ksh1,000 spent, consumers will receive approximately 40.88 units of power, a slight drop from September’s 41.03 units.
Low-income households will receive fewer units for their money compared to previous months.

Rise in forex adjustment signals higher electricity costs.

A gazette notice issued on Friday, October 11, revealed the significant rise in the foreign exchange adjustment for electricity, which has increased from Ksh103.32 to Ksh114.89 per kilowatt-hour (kWh). Although the Kenyan shilling has remained stable against the US dollar at Ksh129.19, the new forex charges are set to impact households, especially those consuming between 30 and 100 units of electricity monthly.

For families using up to 30 kilowatt-hours per month, this means they will now receive only 25.69 units for every Ksh500 spent, down slightly from 25.8 units last month. This adjustment will be particularly challenging for low-income households already grappling with high living expenses.

Electricity costs have been declining until now.

Interestingly, this rise comes at a time when electricity prices have generally been declining throughout the year. Earlier this year, middle-income households faced peak prices of Ksh36.81 per unit, which have since dropped to Ksh30.13. July even saw a notable nine percent reduction in costs for households using 200 units, where bills fell from Ksh6,250.90 in June to Ksh5,663.

Influencing factors behind electricity prices

The cost of electricity is affected by various factors, including the fuel cost charge linked to thermal power generation and the forex adjustment based on the shilling’s exchange rates with other currencies. Despite the shilling’s relative stability, the rising forex charges hint at potential pressure on Kenya Power, which recently recorded sales surpassing 900 million kilowatt-hours for the first time in July.

Kenya has also seen robust electricity generation from hydroelectric sources, producing 358.23 million kilowatt-hours in July, an increase from 254.51 million in January. This shift away from thermal power generation has contributed to lower fuel costs throughout the year, but the new forex adjustment signals a potential reversal in this trend.

Implications for households and the economy

Kenya Power collects various charges to meet electricity production costs, including levies for thermal power, rural electrification funding, and regulatory costs. The forex adjustment has become a crucial factor in determining monthly power bills, with far-reaching implications for households and the economy as a whole. As consumers face rising living costs, the impact of this modest increase on household budgets will likely be closely monitored, raising questions about the sustainability of electricity pricing strategies moving forward.