Energy and Petroleum Regulatory Authority (EPRA) has come out to explain why the current billing of electricity prices will last till December 2024.
According to EPRA, this action aims to recover an eight-month unpaid subsidy accrued between October 2019 and March 2023.
EPRA implemented a 15% reduction in tariffs for its end-users in 2022 following a presidential directive which was effective from January 2022 till April 2023.
To maintain this reduction, EPRA required a revenue of Ksh26.3 billion. Sector entities collectively pledged to contribute KSh12.2 billion, with the remaining balance of KSh14.1 billion to be covered through a subsidy from The National Treasury.
However, the pass-through costs remained unchanged from January 2022 with the Treasury honouring its commitment up to August 2022.
The cost incurred for the remaining four months following the shift in policy had to be billed to the consumers.
"This meant that the treasury’s share of the reduction had to be paid by consumers through the pass-through mechanism," EPRA stated.
Fast forward to April 2023, EPRA was forced to further review its tariffs for 2023/2024, 2024/2025 and 2025/2026, which now included the aforementioned unfunded costs.
Its tariff base was not overbilled during the review, as charges were assessed based on existing generation contracts, operation and maintenance contracts, and the associated cost of finance for these services.
On February 14, the Energy CS additionally raised the fuel levy from 0.25 to 0.75, with implementation slated for the following day.
Since then, concerns have been raised over the recent hike in prices, which might see Kenyans, pay triple the current prices.
"Even after approval of the new tariff, we must clear the outstanding unfunded subsidy, which continues to be recovered through the pass-through mechanism up to December 2024" the authority stated.
