Prepaid customers will get free tokens from Kenya Power while those on postpaid plan will see their bills netted off as compensation for irregular or poor-quality electricity supply and unannounced blackouts in fresh regulations.
The proposed regulations gazetted last week for public scrutiny before adoption by Parliament are the latest efforts by the Energy and Petroleum Regulatory Authority (Epra) to compel Kenya Power to improve its supply.
Currently, Kenya Power offers compensation for injuries or damaged assets but does not compensate for financial losses resulting from hiccups such as blackouts.
The Energy (Electricity Reliability, Quality of Supply and Service) Regulations, 2024 will tighten the noose on Kenya Power amid increased frequency of outages that have at times lasted more than 24 hours.
The energy regulator will determine how the affected consumers are compensated.
“A Licensee shall be liable to pay appropriate compensation to a person if there is breach in quality of supply or irregularity of electricity supply by the Licensee, provided that the breach is reported to the Licensee in writing within thirty (30) days of occurrence of the breach,” the regulations read.
“The Licensee may elect to make payment for compensation in the form of; credit on the next monthly bill for customers who receive a bill or prepaid electricity token.”
Epra will use the average consumption of the affected customer and the applicable tariff band to determine the compensation due to an aggrieved customer.
Thresholds for claims that will qualify for compensation in the proposed regulations will be determined by Epra upon the filing of the complaints by an affected consumer(s).
Kenya seeks to adopt the model in most European countries that demand compensation for users whose homes and businesses are cut off from power for prolonged periods.
Kenyan businesses regularly complain that power cuts -- due to its ageing grid -- and unreliable supplies make them uncompetitive and hurt growth.
In 2015, the government rejected a Bill that required Kenya Power to compensate businesses whose power is cut off for more than three hours within a day.
Kenya Power has 9.2 million customers and made Sh24.17 billion in electricity sales from prepaid customers compared to Sh120.18 billion from postpaid clients in the year to June 2023.
A higher number of compensation claims will hit Kenya Power given that the firm will be forced to absorb the losses in its books, ultimately hurting efforts to grow sales.
Kenya Power made a net profit of Sh319 million in the half-year ended December 2023, an improvement from a net loss of Sh1.14 billion posted in similar period of 2022.
Under the regulations, Kenya Power will be required to compensate customers within three months after Epra approves a compensation claim.
The firm will however be shielded from compensating customers if the breach in quality of supply or interruptions are due to natural forces, third-party interference on Kenya Power’s lines or an electrical fault by the customer. Kenya Power is likely to take a hit when the regulations are adopted as Epra moves in to protect customers who have taken financial losses due to frequent outages.
Official data shows that between July and December last year, customers experienced outages lasting an average 8.836 hours per month, a duration longer than the five-hour Epra benchmark.
Kenyans were in November last year plunged into a fifth national blackout in under three years in what was blamed on transmission hitches at two major generators in Olkaria, Naivasha. This blackout is the latest that hit more than nine million consumers relying on the power distribution monopoly.
Besides the dilapidated transmission line, the blackouts have also been attributed to hitches at grid interconnection points and sabotage by Kenya Power.
The increased outages in addition to costly electricity have prompted a big number of consumers to pursue their own power generation, dealing a blow to Kenya Power’s efforts to grow sales.
Big consumers such as Africa Logistics Properties, Mombasa International Airport and the Icipe recently commissioned their solar power generation plants.
East African Breweries Plc last year revealed it was nearing completion of its biomass plants to power plants ahead of fully delinking from Kenya Power by 2030.
Besides the big consumers, wealthy homes are also setting up solar plants as an alternative source of energy.
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