Plans to raise power tariffs put on hold after rejection by ERC

Kenya Power staff carry out maintenance on a power line at Kariobangi in Nairobi. Kenya Power has postponed its plan to raise electricity tariffs in July due to tough economic conditions facing consumers, the firm said on Thursday. File

The planned increase in electricity tariffs by Kenya Power has been put on hold indefinitely after the regulator, Energy Regulatory Commission, rejected its application.

This came as protests mounted from consumer organisations which said households and businesses were already paying high bills for electricity. According to communication from the power utility, Kenya Power, the decision was made after “consultation with the ministry of Energy and the regulator, Energy Regulatory Commission.”

Kenya Power had applied to have the tariffs increased by 25 per cent, which would have led to higher electricity bills for households and businesses, leading to high commodity prices.

It justified its application for a rise saying that, “the current ERC Retail Tariff Review Policy requires the Kenya Power to apply for review of tariffs after every three years. In this case, by June 30, 2011.

Consequently, Kenya Power applied to the ERC for a review of the power tariffs this year to meet the June 30, 2011 deadline,” the statement said in part.

On Thursday, the company, which re-branded recently retreated, citing “the current serious unfavourable social and economic circumstances in the country.”

It added that the decision to postpone the new tariffs was made in consultation with the Ministry of Energy and ERC “until the national social and economic situation improves.”

Kenya has among the highest power costs in Africa, which has negatively affected the competitiveness of local products against those from countries like South Africa and Egypt, which have relatively lower tariffs of up to four times Kenya’s.

Local manufacturers have been lobbying the government for lower tariff regimes to enable them cut production costs. The current power tariffs were approved in June 2008 and became effective on July 1, 2008, for a period of three years.

However, Kenya Power justified the new tariffs, saying, the government wanted to connect more people by 2020 and meet the high demand for electricity arising from a fast growing economy.

Kenya Power, the statement added, needed to procure additional power from existing power generating firms and from new ones, which are commissioned to set up plants.