Why is there a fixed charge on our power bills?
The Sunday Nation
Nairobi,
26 February 2012
David Njoroge has some issues with the Kenya
Power Company. He writes: “Kenya Power has approximately 4 million
subscribers (correct me if you may) who pay a fixed Sh120 per month,
energy or no energy supplied. With this figure they collect Sh480
million which to any company is a windfall…”
Let me first stop and correct him: according
to the audited annual report of the financial year ended 30th June 2011,
Kenya Power had a total of 1.75 million customers. Of these, about 1.2
million were in the “KP Domestic” category and about 300,000 in the
“Rural Electrification Domestic” group. The rest were industrial
consumers of different sizes.
Therefore, at Sh120 per month, the domestic
consumers paid a total of Sh144 million monthly or Sh1.7bilion in the
financial year. Now that’s quite a tidy sum but can be considered a
“windfall”?
Well, in the last financial year, the
company’s electricity sales were about Sh42.5 billion. Thus the Sh1.7
billion from the fixed charge represent about 4 per cent of the
turnover. I wouldn’t call that a “windfall”.
Nevertheless, we must wonder what the purpose
of this fixed charge is. David puts it this way; “My gripe with them
[Kenya Power] is this: Is it too costly for them to have a toll free
emergency line for its customers? I spend on average Sh50 every week
calling…to report outages.”
David is suggesting that part of the Sh120 can
be applied to cover the cost of running a toll-free emergency call
centre. I agree with him; even though I don’t think that this was the
initial intention of the fixed charge.
My guess is that it was intended to cover the
cost of reading the meter. This is why it is collected whether or not
you have consumed energy. Thus I don’t see it’s justification for
customers who are on the Pre-Paid system – their meters are not read!
But David makes another suggestion: “can't
they 'prorate' the fixed charge accordingly to the power supplied?” Now
that would simplify things a lot, but what would be the additional cost
per unit?
In the 2010/2011 financial year, Kenya Power
sold a total of 5.8 billion units of electricity (kWh). If we divide the
Sh1.75 billion collected through the fixed charge equally amongst the
units, we get Sh0.30 (30 cents) per unit.
The net effect of this would be a small
reduction in the monthly bills for domestic customers and a large
increase for industrial consumers. Therefore, it becomes a big policy
decision: that is, is it better to support consumption or production?
Finally, David asks whether it is possible to
install automated sensors that alert the power company when there is a
fault in any line. Technically, it can be done but I think the cost
would be too high. An easier and cheaper way would be an SMS system
where customers simply send in their account number and a code for the
type of emergency – for example; “0” for blackout; “1” for broken live
cable; “2” for a burning transformer etc.
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