Today marks a significant development in the energy sector as the Energy and Petroleum Regulatory Authority (EPRA) implements a notable reduction in electricity prices. Following a comprehensive review, EPRA has announced an average decrease of 9.3 percent in power tariffs, effective immediately. This adjustment particularly benefits domestic consumers, who will see their rates drop from Sh32 to Sh29 per kilowatt-hour (kWh) for the month of February 2024.
EPRA’s decision to revise electricity prices stems from several key factors, including adjustments in the Fuel Energy Cost (FEC) and foreign exchange rate fluctuation adjustment (Ferfa). Notably, the FEC has been revised downward from Sh4.33 per unit to Sh4.14, while the Ferfa has been reduced from Sh6.46 per unit to Sh3.21.
The rationale behind these adjustments lies in the substantial decrease in foreign currency repayments for power purchases made by Kenya Power in January 2023. EPRA Director-General Daniel Kiptoo emphasized the positive impact of these reductions on mitigating electricity costs for consumers, citing a significant decrease in forex adjustments due to lower foreign currency exchange payments.
This reduction in electricity prices comes as a welcome relief for consumers who experienced a sharp increase in tariffs, rising as high as 17.3 percent in January. The earlier surge was primarily driven by the repayment of outstanding power purchase costs by Kenya Power, involving various currencies such as US dollars, euros, British pounds, and Indian rupees.
The accumulation of debt since March of the previous year had strained electricity tariffs, compounded by challenges in sourcing forex. However, EPRA’s intervention marks a positive step towards addressing these concerns, offering much-needed respite to households grappling with escalating utility bills.
With electricity bills witnessing a significant reduction, consumers can anticipate tangible savings and improved affordability in the coming months. EPRA’s commitment to ensuring sustainable and equitable energy pricing underscores its pivotal role in fostering a conducive environment for all stakeholders in the energy sector.
By: Montel Kamau
Serrari Financial Analyst
8th February, 2024
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