Kenya Power is looking at reducing the standing charges it pays to power producers with the aim of passing on the benefit to the end consumers as it also targets to boost its profits.
The utility’s management argued that if the cost of electricity from independent generators were to reduce, then, it would be easier for the utility firm to also reduce the cost of power to customers.
Negotiations between the company and producers, including KenGen and independent power firms, are ongoing.
File image of Kenya Power technicians making repairs
Last year, KPLC was in talks with wholesale power producers like Gulf Power, Iberafrica and Tsavo Power, to review their prices. However, the companies turned down Kenya Power’s proposal arguing that there was low demand due to the Covid-19 pandemic.
Industry experts have, however, say that Kenya Power’s arrangement with producers is expensive.
According to the Auditor General, the power company spent Ksh87 billion on electricity purchase for in 2020, with Ksh47 billion going to capacity charges.
“These charges which account for 54 percent of the total cost of sales are significant and considering their fixed nature may have adversely affected their performance,” the Auditor General said.
In June 2020, the company saw a loss of Ksh939 million down from a profit of Ksh262 million.
Since 2018, KPLC has been advocating for an increase in electricity prices.
In November 2020, the Energy Regulatory Commission of Kenya informed the public that the tariff application by the KPLC was still under ERCs review and no approvals have been granted.
“Over the internal review on the tariff application has been completed, and in accordance with the Energy Act 2019 and the Constitutions of Kenya 2010, the Authority will embark on stakeholder engagements and public hearings on the application before the final approval is granted,” the commission stated.