Kenya will next month roll out a study of the cost of service for electricity, with an eye on the new power tariffs that are expected to be in place from July next year.
The Ministry of Energy invited firms to bid for the project that among others, seeks to reveal the current costs involved in generating, transmitting and distributing electricity which will then form the basis for the new electricity prices.
Kenya Power is expected to submit a proposal on new tariffs to the Energy and Petroleum Regulatory Authority (Epra). The tariffs are expected to be in place for three financial years from July 2026.
“Overall, the services of the consultant shall be to determine Kenya electric system charges, in generation, transmission, distribution and retail. This shall inform costs incurred in delivering the services and which fully recover costs while addressing social and equity concerns,” the ministry says in the tender documents.
“The findings shall be used to support Epra in the review of the electricity tariffs applicable for the 2026-2028 Tariff control period.”
The contracted consultant will also be tasked with developing a framework that will cater for the changes in cost of major inputs used in generation and distribution of electricity every year.
The study comes at a time when electricity prices have significantly gone up in recent years, choking consumers whose spending power has gone down, amid heavy taxation.
For example, the cost of 200 kilowatts-hour (kWh) was Sh5,743.10 last month, compared to Sh5,185.96 in December 2021, while 50kWh went for Sh1,282.11 from Sh945.59 in the same period.
This current cost of service study is the seventh such study that the government is undertaking as it seeks to capture how prevailing market forces have impacted on the cost of electricity generation and distribution.
Electricity prices continue to be a major concern for homes and businesses highlighting why the study is critical. The last two years have also seen Parliament and the Ministry of Energy ramp up efforts to lower the cost of electricity, albeit with little success.
Parliament has proposed a raft of measures to curb the runaway power prices, key among them being a freeze on all power purchase agreements and an audit of the deals between Kenya Power and thermal power plants.
An attempt to forcibly have power producers lower the prices at which they sell electricity to Kenya Power flopped, ending hopes of steep drop in power bills.
Fuel Cost Charge and forex adjustment are the two biggest factors that determine the monthly changes in cost of electricity.
The current electricity tariffs that came into force from April 2023 are expected to lapse in June next year. The Energy Act, 2019 allows Kenya Power to submit a proposal for new ones that will run for three financial years.
But Kenya Power has not always sought to review the electricity tariffs every three years. For example, the 2023 tariff review ended a five-year wait.
