New electricity tariffs are still confusing even after clarification

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

19 August 2018

The Energy Regulatory Commission (ERC) needs to go back to the drawing board and rework the new structure of the electricity tariffs. According to the announcement released on July 30, domestic consumers will be charges Sh12 per kWh for the first 10kWh and then Sh15.80 for additional consumption up to 1,500kWh.

I received my first bill under the new tariffs this week and noted that I was charged Sh15.80 for all the 372kWh consumed during the billing period. My “consumption charge” is therefore, Sh5,877.60.

In my view, the Kenya Power and Lighting Company should have charged me Sh120 for the first 10kWh and then Sh5,719.60 (= 362kWh x Sh15.80) for the additional consumption. This makes the total Sh5,839.60 – that is, Sh38 less than what I was billed.

Why am I concerned about 38-bob (0.65% of the cost)? Well, think about the “life-line” consumer who is supposed to benefit from the low tariff. If they consume just 10kWh, the consumption charge will be Sh120.

If they consume 11kWh, the charge can either be Sh120 + Sh15.80 = Sh135.80 or Sh15.80 x 11 = Sh173.80. The difference is now 28%! I have tried to get clarification from ERC on the correct calculation but by the time of writing, they had not responded.

Soon after releasing the final approved tariffs, the ERC issued a clarification; but that only creates even more confusion. First of all, it is a 15-page clarification of a 3-page original document!

Nevertheless, nowhere in the original tariff document nor in the clarification is it stated that the Sh15.80 rate will be applied to the entire consumption if the consumer exceeds 10kWh. I asked the ERC for a copy of the official Kenya Gazette notice on the new rates but, by the time of writing, they had not sent it.

The clarification further states that “forex and inflation adjustments have now been imbedded in the base energy charge”. My understanding of that statement is that these amounts are included in the Sh15.80/kWh rate. However, in my current bill, the amounts are still being charged separately.

It is also stated that “the overall unit cost (inclusive of levies and taxes) of power reduces from Sh23.49/kWh…to Sh20.18/kWh…” That is misleading! It creates the impression that this reduction is a result of the new tariff structure. That is not true!

The correct position is that the base energy cost was increased. Any reduction noted on the total bill is a result of lower fuel-costs, forex and inflation adjustments. These vary each month and they can either go up or down. Levies and taxes are constant rates and the new tariffs did not change them.

These discrepancies are the reason why I am asking the ERC to go back to the drawing board and rework the tariff structure. By the way, at Sh0.3/kWh, electricity consumers are pumping over Sh250 million into the ERC annually. Surely, they deserve better service than this!