Do estimated power bills inflate the total charged?

 By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

26 October 2014

Zacs Mwatha is wondering what happens when the Kenya Power & lighting Company underestimates a bill for several months and then reads the actual consumption. He writes: “I would like to know whether KPLC gains from giving estimate bills… [Since] the billing is done on a graduated scale, the more units you consume, the more expensive it becomes.

“Let us assume that the fuel cost/forex adjustments etc remain the same for four months and your average consumption is 200 units per month. Suppose KPLC gives you an estimated bill of 60 units for the first three months then the meter is read in the fourth month. This means that in the fourth month you are billed for 200 + 140 + 140 + 140 = 620 units. What is the net effect of the estimates on the final bill you pay on your 800 units for the four months?”

I will use Zacks’ example to investigate the effect of an underestimated bill. First, let me clarify that it is only the “Consumption Charge” that is calculated on a graduated scale. The other levies and adjustments are charged constant amounts per unit consumed.

For domestic consumers, the first 50 units (kWh) are charged Sh2.50 each; then from 51kWh to 1,500kWh, the rate is Sh11.62. Therefore, if Kenya Power estimates that you consumed 60kWh, the Consumption Charge will be: Sh125 for 50kWh plus Sh116.20 for 10kWh.

Therefore, the estimated Consumption Charge comes to Sh241.20. Doing this over three months makes a total of Sh723.60. Then on the fourth month, Kenya Power reads the meter and bills you for the total of 620kWh.

The Consumption Charge for 620kWh comes to Sh125 (for the first 50kWh) plus Sh6,623.40 (for the remaining 570kWh); this equals Sh6,748.40. Therefore, your total payment in the four months come to Sh6,748.40 plus Sh723.60; that is Sh7,472.

What if the meter had been read each month and you were billed for 200kWh? The monthly Consumption Charge would have been Sh125 (for 50kWh) plus Sh1,743 for 150kWh; this equals Sh1,868 per month.

If you paid this amount for four months, the total payment would be Sh7,472. This is exactly the same as what you’d pay if your bill was estimated for three months and then corrected in the fourth month! Is there something wrong?

Not quite; the reason the two amounts are exactly equal is that the estimated consumption is higher than 50kWh. If it was lower, then the total of bill from the first calculation would be higher than that from the second one.

However, I do not expect a company like Kenya Power to play with estimated bills with the aim of increasing their income. Even if such a case were to be detected, it would most likely be a result of a genuine arithmetic error or incompetence or laziness on the part of employees; but not company policy.