Households now have a reason to smile following the Energy Regulatory Commission’s (ERC) decision to lower the cost of electricity from 12 shillings to 10 shillings per unit.
ERC on Wednesday announced that the 2 shillings reduction is applicable to poor households consuming a maximum of 100 kilowatt-hour (kWh) and it follows the regulator’s amendment of increasing the subsidy threshold from the 10 units announced in July to 100 units.
Nonetheless, the cost doesn’t factor in other variables like the 16 percent value-added tax (VAT), inflation, forex charge, and fuel cost charge.
The cost review comes not long after President Uhuru gave the ERC a directive to reduce power tariffs for small and medium-sized enterprises (SMEs) to enable them to minimize the cost of production for the sake of the economy.
According to Pavel Oimeke, Director General, ERC, the commission put into consideration the views of the public on power bills and views from the National Assembly, the Senate and other consumers.
Notably, the rates of 15.80 shillings per unit published on July 31 shall remain the same for domestic consumers that use more than 100 units a month.
“The lifeline tariff seeks to ensure consumers from the informal settlements, urban and peri-urban and rural areas get a relief from the increased cost of living. This means that 5.7 million customers will be covered by the tariff,” said Mr. Oimeke.
The cost of power for SMEs has also been revised downwards. Based on their power consumption, small businesses were categorized into two by the commission. Small Commercial 1, feature SMEs that use up to 100 units per month. They will pay 10 shillings per unit down from the initial 15.60 shillings per unit.
Other SMEs that consume more than 100 units, that is, between 100 and 15,000 units per month will continue paying the rates published in July 2018.
Meanwhile, as power consumers rejoice, Kenya Power is doomed as it is bound to face more challenges. Coupled with the financial issues it has been facing for the last one year, the company might eventually register a negative in their 2018 financial year.