Why power firm staff should pay blackouts penalty

If my suggestion to compensate power consumers for blackouts was adopted, how much money would be at stake? I estimate that most consumers experience a power outage once each week — at least I do.

This translates to about 50 blackouts per year. Most of these last less than one hour, so the penalty would be just Sh580 (which I proposed last week) for each incident. This makes a total of Sh29,000 in one year.

According to the most recent annual report from Kenya Power, the company had 2,766,000 customers by June 30, 2014. If each of them experiences 50 blackouts in one year, the total amount payable would be slightly over Sh80 billion!

That’s a lot of money, so let’s put it into perspective. In the year ending June 30, 2014, the company returned a gross turnover of Sh105 billion. If we remove the “pass-through” levies (fuel costs and foreign exchange adjustments) it was left just Sh72 billion. Now this is less than the Sh80 billion that would be needed to compensate consumers for blackouts!

BASIC COMPENSATION

The total salaries and wages paid during that year was Sh11 billion. So, if my suggestion was implemented, the staff would get nothing in their pay-slips. In fact, they’d be left with a bill that would take them about eight years to clear! There is no way they can afford the compensation.

So what is wrong with the figure that I proposed ? Is Sh580 per blackout incident too much? Are the staff salaries too low? In my view, it is none of the above. The problem is that one blackout per week is simply too much.  And this situation exists partly because the people in charge of the power distribution system do not feel any pain when it goes off.

Like I mentioned last week, in the “developed” countries, there are simply no blackouts – I went through four years without ever seeing a single one.

Let us turn the analysis upside down and ask what would be an acceptable level of power outage. I don’t think it would be fair to deduct more than 10 per cent of an employee’s salary. So, the most that can be deducted from the whole payroll is about Sh1 billion per year. Sharing this out among the 2,766,000 customers yields Sh361 per consumer per year. Now this is less than the Sh580 that we allowed as basic compensation per blackout. Therefore, a customer should go for more than a year without the power going off for any reason whatsoever!

The acceptable duration between outages can be calculated by diving Sh580 by Sh361. The answer is 1.6 years, or 19 months. Wouldn’t that be nice?

The big question is: what do we need to do to achieve that level of performance? Well, we can start with compensating consumers and penalising the staff for outages. I think it would wake people up.