Electricity prices increased by an average of 2.8 percent, or 86 cents per unit, this month, the first increase since January, which is expected to raise the cost of living.
In its latest monthly review, the Energy and Petroleum Regulatory Authority (Epra) raised the fuel energy excise (FEC) to Sh3.59 per unit in June from Sh3.52 in May. FEC is a pass-through cost collected by Kenya Power and passed on to power producers who burn diesel to generate electricity. The increase indicates an increase in the consumption of thermal energy, the most expensive energy source, last month.
Epra also raised its foreign exchange rate fluctuation adjustment (Ferfa) to 1.76 shillings per unit from 97 cents in May. VERVA is a provision for the cost of servicing foreign currency loans used to finance power generation.
The increase indicates higher power purchase cost payments to power producers during the month. Independent power producers (IPPs) are paid in foreign currency, mainly in US dollars and euros.
The increase means that a customer in normal household category 2 will pay Sh1,028 for electricity this month for 32.9 units, representing an increase of about Sh28 from Sh1,000 for the same amount of power.
This is the first time that energy prices have risen since January.
Prices have fallen for five consecutive months as consumers have enjoyed the dual benefit of increased production of cheap hydropower due to adequate rainfall during this period.
It also enjoyed lower prices due to the strength of the shilling, which eased the burden of foreign currency-denominated energy purchase costs on independent energy producers.
Among other things, the price increase is expected to put pressure on the cost of living, and comes at a time when inflation rose in May for the first time since January, according to the Kenya National Bureau of Statistics (KNBS).
Inflation averaged 5.1 percent in May, up from five percent in April. This is the first increase since January, when the cost of living measure rose to 6.9 percent, compared to 6.6 percent the previous month.
This was largely due to food inflation, which rose in May due to higher vegetable price inflation due to supply disruptions due to recent heavy rains and floods in some parts of the country.
However, fuel inflation declined during the month, reflecting the downward adjustment in station prices and lower electricity prices.
