New calculations show that consumers will pay about 1.5 percent more per unit of electricity used in August, due to higher fuel and foreign exchange costs.
The Energy and Petroleum Regulatory Authority has revised electricity prices upwards in its latest monthly review, which will see average domestic customers pay an average of 42 cents more per unit of energy used than they did in July.
For example, this category of customers will pay Sh2,877 for 100 units this month, compared to Sh2,832 in July.
August now joins January and June as the only three months in which the Energy Regulator has increased energy prices this year.
The cost of electricity is one of the major factors affecting the cost of living and doing business in a country.
Ebra reviews three of the eight components that make up a monthly energy bill.
These taxes include the Fuel Energy Cost (FEC), the Foreign Exchange Fluctuation Adjustment (Ferfa), and the Water Resources Management Authority (Warma) tax.
In the latest review, the energy regulator raised the base rate to Sh3.48 per unit from Sh3.25 last month, and raised the base rate from Sh0.98 per unit to Sh1.17.
The Warma tax was kept at 2 cents per unit.
The basic tariff, referred to as the consumption charge, remains the largest single component of energy bills and is adjusted every three years.
Meanwhile, the National Electricity Company reviews the inflation adjustment every six months to enable Kenya Power to offset the costs it incurs due to inflation.
Value Added Tax, Rural Electrification Programme and Renewable Energy Tax (EBR) are other components that form part of electricity tariffs.
The increase in electricity tariffs indicates an increase in thermal electricity generation in July compared to June. The tariffs are used to compensate power producers who use heavy fuel oil (HFO) to generate electricity.
The vervain’s rise came after the Kenyan shilling lost some value against the US dollar last month.
The local currency was trading at around 128 shillings to the US dollar at the beginning of last month before falling to a low of 133 shillings at the end of the month.
The weak local currency raises the cost of purchasing power from independent power producers. It also places an additional burden on Kenya Power when it comes to repaying its external debt.
“The forex market is usually a product of the change in price as well as the amount of payments made,” said Stephen Vikiru, Kenya’s energy finance director.
“We paid more power purchase commitments in July than in June,” he added.
The rise in energy prices is expected to hit consumers, who have started to feel the pinch of inflation in recent months.
Annual inflation fell to 4.3 percent in July, according to the Kenya National Bureau of Statistics, while consumer prices fell by 0.2 percent during the month.
This was driven by lower prices of food and non-alcoholic beverages, transportation, and the housing, water, electricity and cooking gas index.
The housing, water, electricity, gas and other fuels index decreased by 0.4 percent between June 2024 and July 2024 due to a decrease in the prices of 200 kWh of electricity, 50 kWh of electricity, and kerosene by 9.4 percent, 4.4 percent, and 0.8 percent, respectively.