How does Kenya Power work out pre-paid electricity units?

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

25 March 2018

The Kenya Power and Lighting Company has received persistent criticism over its billing of pre-paid electricity over the last two weeks. The public has been complaining about this mode of payment ever since its introduced several years ago. Indeed, I wrote about it in September 2014 and explained how the system arrives at the number of electricity units to be loaded for a specified amount of money.

Over the years, I find it interesting that, when people are commenting on a public forum, they claim that the pre-paid system is extortionist yet in one-to-one conversations they say that it is cheaper than the monthly post-paid billing!

Nevertheless, as explained in the 2014 article, the method of calculating the number of units is exactly the same as that used in the old post-paid bill – right down to the last decimal place!

Now the post-paid monthly bill starts of with a “fixed charge” which is levied whether or not the customer consumed any electricity. For the majority of domestic consumers, this is Sh150 + VAT = ShSh174.

This is exactly the same thing that happens in the pre-paid system. The fixed charge of Sh174 is deducted from the first payment of each calendar month. Thus, if you send Sh500, only Sh326 (Sh500 – Sh174) will be available for the purchase of actual electricity units. This happens once only each month.

The next step in the post-paid bill is to work out the net cost of electricity consumed. The rate used is not a fixed amount per unit: it is a “stepped tariff”. The first 50 units are very cheap: they are charged at Sh2.50 + VAT.

After 50 units, the rate shoots up to Sh12.75 + VAT per unit. The reason behind this “stepped tariff” is to subsidise poor families which don’t consume a lot of electricity. The pre-paid system follows exactly the same “stepped tariff”.

In addition to the consumption charge, there are adjustments (fuel, foreign exchange and inflation) and levies (ERC, REP and WARMA) that are added in the monthly bill. These are calculated per unit of electricity consumed. In the pre-paid system, these are added to the unit cost before dividing to get the number of units.

For these reasons, the number of units that a customer gets for a given sum of money can vary greatly – either upwards or downwards! I have seen one customer complaining that he sent Sh300 to the company in three instances within a period of two weeks and was given 10.7, 22.1, and 13.4 units, respectively.

All in all; I think Kenya Power has mishandled the pre-paid system and this is hurting the company’s reputation greatly. I am told that a publicity campaign to educate consumers on how the billing is done is to be launched soon. In my view this will be a total waste of money!

All the power company needs to do is to re-design the message sent to customers when purchasing pre-paid units to give a detailed breakdown of where all the money goes.