Having read our previous two posts on the Kenya Power billing system, I am sure you must be asking yourself why there are so many charges, levies and taxes. This why.

Kenya Power billing concept is divided into two:

• KPLC Charges
• Government Taxes and Third Party Levies

KPLC Charges

Kenya Power earns its revenue primarily from the Fixed Charge and Consumption Charge.

The Fixed Charge is used by Kenya Power to cater for the fixed costs like meter reading, billing, printing and postage of bills and customer care.

The Consumption Charge is from the customers’ electricity consumption within the billing period. Kenya Power uses about 70 to 75 percent of this money to purchase bulk power from electricity generating companies e.g. KENGEN which it retails to its customers. The balance of 25 to 30 percent is used by Kenya Power for its operations, and it is from this balance that it makes a profit.

Government Taxes and Third Party Levies

Kenya Power is a designated collector of VAT for the government, and statutory (i.e by law) levies for the Rural Electrification Authority and Energy Regulatory Commission.

Kenya Power is also required to recover cost of fuel used to generate part of the power consumed by each customer each month, and remit the same in total to thermal generators who generated the power.

It is important to note that during rainy seasons when dams are full, there is higher generation of hydro electricity which is much cheaper and thus less generation from fuel-based generators leading to significant reduction in fuel cost charges. This is why you will notice a slight reduction in your electricity bill during such seasons. During the dry seasons there is less generation from the cheaper hydro dams and more generation from the more expensive thermal (fuel based) generators and hence the rise in fuel cost charge and subsequently rise in your electricity bill.

The foreign exchange component is in ration to the fluctuation of hard currencies against the Kenya Shilling for foreign currency based payments in the sub-sector related to, e.g. electricity project loan repayments. These projects include those for generation and transmission.

Kenya Power claims not to retain any of this money and thus it does not contribute to its profit.

Due to the fluctuation in price and quantities of fuel used to generate electricity in any given month, the fuel cost varies month to month on your  bills and reflects the cost of fuel incurred by thermal generators to generate the portion of electricity sold to customers by Kenya Power. Kenya Power has no powers to adjust the fuel cost charge as it is a function outside its control and mandate.

The Energy Regulatory Commission (ERC) Levy goes to the Energy Regulatory Body to cater to some of its day to day activities, while the Rural Electrification Project (REP) Levy contributes significantly to implementation of the Rural Electrification Project.

Lastly, it is also important to note that power charges (tariffs) are set and fixed for a period by the Energy Regulatory Commission (ERC) for various categories of customers and Kenya Power cannot vary these until it applies to the ERC for review.