Power prices rise 3.7% on higher cost of fuel

Kenyans will pay more for electricity this month after the energy regulator increased prices owing to higher fuel costs and a weaker shilling.
The Energy and Petroleum Regulatory Authority has raised the Fuel Energy Charge (FEC) to KSh4.94 per unit, an increase of 18.7% from KSh4.16 last per unit month. EPRA also raised the foreign exchange rate fluctuation adjustment (Ferfa) from KSh1.38 per unit to KSh2.05, an increase of 48.5%.
This has pushed up the cost of a unit of electricity to about KSh28 for an ordinary domestic customer, an increase of about 3.7% from about KSh27 per unit in September.
The FEC is a pass-through cost collected by Kenya Power and remitted to power producers who burn diesel to generate electricity. The cost lags for a month, which means the FEC for October covers the fuel consumed in September.
Epra last month increased the prices of petrol by KSh16.96 per litre, diesel went up by KSh21.32 while kerosene increased by KSh33.13. This means that in Nairobi, motorists are now buying petrol at a record KSh211.64, diesel at KSh200.99 and kerosene at KSh202.61.
This is the first time fuel prices are retailing at above the KSh200 mark in Nairobi. The Ferfa charge covers the fluctuation of the Kenya shilling against major currencies such as the US dollar.
It covers costs incurred by Kenya Power such as repayment of foreign loans and power purchase costs.
The Kenyan shilling, which was trading at a mean of KSh148.7 against the US dollar on Monday, has been on a free fall in recent months despite interventions by the government to arrest it’s decline, especially through fuel importation on credit.
The increase in power prices is set to exert further pressure on households and businesses even as inflation last month rose for the first time since May. Inflation rose to 6.8% in September, according to the Kenya National Bureau of Statistics (KNBS).
Prices of commodities under transport, food and non-alcoholic beverages and housing, water, electricity, gas and other fuels, increased by 13%, 7.9%, and 6.3%, respectively, between September 2022 and September 2023.
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