WORLD OF FIGURES: This is how to simplify electricity bills - Daily Nation

WORLD OF FIGURES: This is how to simplify those complicated electricity bills

Sunday July 15 2018

There is need to simplify the electricity billing method. PHOTO | FOTOSEARCH

There is need to simplify the electricity billing method. PHOTO | FOTOSEARCH 

Without doubt, there is need to simplify the electricity billing method. No matter how many times the Kenya Power and Lighting Company explains how it’s done, consumers still find it hard to understand.

Even the proposed new tariff system will not sort out the problem. The confusion arises from three reasons. First, there is a fixed charge which is applied whether a customer consumes electricity or not.

Second, the consumption is billed in a “staircase” structure where the first 50 units are charged at Sh2.50 each. Then, from 51 to 1,500 units, the rate jumps to Sh12.75 per unit.

Thirdly, there is a long list of levies and adjustments that are added. For some of them, the rate per unit varies from one month to the next while for others it is constant throughout.

Furthermore, one of the levies is charged as a percentage of the consumption cost while all others are billed per unit.

It is difficult to understand why we have such a convoluted billing method. I suspect that it is designed to make work easier for the power company to do its accounts — they capture only the “energy charges” when posting the sales into the books.

ELECTRICITY PRICES

In a nutshell, consumers want to be able predict the number of units they will get when they send in a certain amount of money — the same way that motorists drive into a petrol station and ask for fuel worth, say, Sh1,000.

If the advertised price is Sh108.80, the driver knows that Sh1,000 translates to 9.19 litres.

Now, apart from hiking the electricity prices (by about 35 per cent for most consumers), the proposed new billing method does away with the fixed charge but retains the “staircase” pricing and the additional levies and adjustments.

For that reason, I don’t think that the confusion about billing will end.

In my view, the Energy Regulatory Commission (ERC) should implement a consolidated flat unit price for each category of consumers.

This would include the consumption charge and all the taxes, levies and adjustments.

Since the adjustments change each month, the ERC should start announcing the unit prices of electricity on a monthly basis — the same way that it does for fuel.

This announcement should give the breakdown of the various costs and levies that have been captured.

Following this announcement, Kenya Power should then bill consumers using the consolidated flat rate for that month without showing any breakdown.

After all, a restaurant bill does not show the different costs of the ingredients used in making your meal!

Apart from simplifying the billing method, this flat-rate system has the added benefit of revealing the true unit cost of electricity in Kenya.

At the moment, a customer cannot tell this cost by simply looking at the bill — you need a pen, paper and a calculator to work it out.