Kenya Power under pressure on serious issues affecting consumers

Image result for kenya power

Is Kenya power overcharging Kenyans?

Kenya’s maximum power demand has hit 1,832 megawatts (MW) and is expected to rise further this month as manufacturers ramp up production ahead of the festive month.

The Energy Regulatory Commission (ERC) says that peak demand stood at 1,832 MW on August 15, when homes and businesses consumed 33.3 million kilowatt hours (kWh) of electricity. This represents a four per cent growth since the beginning of the year when peak demand stood at 1,770 MW, the fastest expansion in years.

Image result for electricity gif

However Kenya Power is under pressure to lower electricity leakages experienced during transmission of power from generating plants along with power theft after the energy regulator reduced the allowable losses rate.

Electricity losses have a direct impact on consumers’ bills as it is factored in tariff planning while the listed power company loses billions in earnings and value for its shareholders.

The losses are the difference between the units of electricity Kenya Power buys from producers and the actual units sold to consumers.

The allowed system losses rate is 14.9 per cent. This is a revision from 15.9 per cent in the tariff control period done in July 2018.
Pavel Oimeke, the director-general of Energy Regulatory Commission (ERC).

Image result for Pavel OimekeThe cut comes amid ongoing government campaign that has seen Kenya Power extend low voltage lines to remote villages to speed up the country’s electrification rate under the Last Mile Connectivity Project (LMCP). Low voltage power lines suffer the drawback of heavy electricity losses during distribution.

This means the utility firm has been left at a crossroads with the system losses burden. On the one hand, the State is making it connect poor homes to the national grid through extension of losses-prone low voltage lines while on the other hand its allowable losses headroom has been shrunk.

The ERC, the sector’s regulator, factors electricity losses, including leakages and theft, into power tariffs that Kenya Power is allowed to charge homes and businesses. Power losses below 14.9 per cent translate to efficiency earnings to Kenya Power while the firm absorbs losses when the rate stays above.Image result for kenya power

Records indicate that one percentage point in system losses is equivalent to sales of Sh1 billion. A cut in system losses reflects efficient use of the country’s power resources.

Kenya Power’s net profit for the year ended June 2018 plunged 64 per cent to Sh1.9 billion on rising costs in power transmission and distribution along with a heavy finance cost burden. In the period, its electricity sales stood at 8.5 billion units, fetching the firm Sh95.5 billion in sales revenue. The company is yet to reveal power losses rate during the review period.

The Nairobi bourse-listed power distributor has in recent years announced plans to cut the losses rate to single digit level.Image result for kenya power

Kenya Power 2017 annual report said that the company was working towards reducing system losses from double to single digit over time to improve the energy balance, reduce energy purchase costs and consequently increase revenues,”

“We are also deploying an information technology system to help manage system losses. In this regard, we have acquired Energy Balance Module software to help identify areas with high losses within our power network.”

Last year, Kenya Power tapped the International Finance Corporation, the World Bank’s private arm, for a two-year project aimed at sealing these electricity leakages.

The Sh80 million initiative, half financed by the IFC, will focus on reducing power losses on the utility firm’s network.

Leave a Reply

Your email address will not be published. Required fields are marked *