Electricity Billing Expert and Executive Director of ELCOS, Eng. Isaac M. Ndereva has raised concerns over Kenya’s electricity tariffs, questioning fuel charges, forex adjustments and VAT application.
He argues that multiple levies inflate consumer bills and says reforms could significantly lower the cost per unit for households.
Speaking on Radio Generation on Tuesday, Ndereva said billions have been collected over the years under the fuel cost charge.
“There is a time we had mentioned that in five years, around Sh70 billion had been taken or collected through Kenya Power, right, in the name of fuel cost,” he said.
He added that consumer advocates now focus on limiting losses. “What we do is to at least make sure that they don't steal too much,” highlighting the level of corruption existing in the power sector.
Ndereva noted that in March 2023, the regulator set a three-year tariff control period. “In March of 2023, EPRA came and set the tariff control period for three years, which is supposed to be ending 2026 in March,” he said.
He observed that Kenya Power has not made up an application to EPRA for the tariff review, but expressed hope that new developments would be reflected.
“Our expectation as a consumer advocate is to ensure that they are setting the tariff in line with the new developments,” he said.
Among those developments is the upgrading of transmission infrastructure linking inland generation to the Coast region.
“We have always said that around three shillings of our bill per kilo hour per unit has been taken by the Mombasa generators,” he said, referring to diesel-powered plants.
He explained that new high-voltage upgrades between Isinya and Mariakani now allow transmission at 400kV, reducing reliance on diesel generation at the Coast.
“As a result, the generation using Rabai and Kipevu Three should reduce, that should now diminish. I mean, it should be less,” he said.
The electricity expert outlined what appears on a typical electricity bill. “You are charged eight things,” he said. “There is the token amount, and then you come and pay seven other components.”
He listed the fuel cost charge, “between three to five shillings,” as well as foreign exchange adjustments tied to power purchase agreements signed in dollars and euros.
“You realize there is a time when the dollar was around 100, now it's 130. The 30 shillings on top you have to be charged,” he said.
He also cited the Rural Electrification Programme levy. “That rural electrification program is money that's supposed to be collected to subsidize connectivity to rural areas,” he said, adding that billions collected go to the Treasury, and they don't release the whole amount.”
The regulator’s levy also drew criticism. “EPRA is supposed to be protecting consumers,” he said. “But this headmaster is only paid by the consumers.”
He noted that the levy rose from three cents to eight cents per kilowatt hour. Value Added Tax was described as particularly contentious. “The fuel cost charge in our bills is again subject to the 16 percent, that is double taxation,” he said.
The expert argued that if excesses were removed, consumers would pay far less. “In an ideal situation, there are people who will be paying 12 shillings, and others will be paying around 20 shillings,” he said.
Currently, he estimates the average unit costs “roughly about 25,” depending on consumption.
He also addressed so-called “take or pay” clauses in power purchase agreements.
“It is take or pay, whether you buy my power or you don’t pay,” he said, comparing the arrangement to hiring security. “Do you pay the watchman when he has actually beaten a thief? No, you pay him to be on standby whether there is a thief or not.”
As the tariff review period approaches, Ndereva says the key question is whether reforms will translate into lower consumer costs.
“When they are setting the tariff this time, we expect that change to be realized,” he said.
