All eyes are on utility company Kenya Power as it compiles electricity bills for this month, with consumers expecting lower bills given the falling prices of fuel, low inflation, and a stable foreign exchange rate.

Further, increased rainfall in parts of the country in the past few weeks has increased opportunities for cheaper hydro-generated power as opposed to the more expensive thermal power.

“We are still compiling figures on all the fuel data used by electricity generating companies, including independent power producers. The forex and inflation adjustments are also done monthly,” said Kenya Power Communications Manager, Migwi Theuri.

A summary of fuel cost charge and foreign exchange fluctuation adjustments from Kenya Power shows that the fuel cost charge for January fell from Sh5.35 per kilowatt hour to Sh4.93, while forex adjustment increased from Sh1.35 in December, last year, to Sh1.59 this month. Inflation adjustment has also gone up from 28 cents to 30 cents for the period January to June.

The forex adjustment element is also particularly surprising, coming at a time when the local currency has remained fairly stable against the dollar. Apart from consumption, the fuel cost charge forms the largest component of a domestic consumer’s monthly bill.

On target

Inflation fell to a new low of 3.2 per cent in December last year from a high of 19.7 per cent in November 2011, remaining within the five per cent medium-term inflation target set by the Government.

A breakdown of items on this bill for the month of December last year, display a fixed charge of Sh120.00, fuel cost charge of Sh5.35 per kilowatt hour, forex adjustment of Sh1.35, and 28 cents per kilowatt hour for inflation.

Consumers are also charged Sh0.03 per kilowatt hour as levy to the Energy Regulatory Commission, five per cent levy goes to the Rural Electrification Programme and pay a 12 per cent Value Added Tax.

In the period between March 2010 and December last year, the highest foreign exchange adjustment was Sh2.74 per kilowatt hour in October last year when the shilling weakened significantly against the US dollar.

There was also a spike in the price of fuel, pushing the fuel cost charge to Sh9.03 per kilowatt-hour in November 2010, the highest in the last two years.

“Fuel cost adjustment for the current month is based on fuel used to generate power by both the private and public sector generators in December last year,” said Theuri.

He added that the foreign exchange adjustment is for a similar period and is the difference between the initial value of the foreign currency for goods and services procured by the sector at the time of contracting or ordering, and the value at the time of payment for all transactions involving foreign exchange in December.

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