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With dams full, lower the cost of electricity

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By EDITORIAL
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After a long time, Kenya’s dams have filled up following heavy rainfall over the past two months. That is a major boon to the country. Away from the devastations of landslides and floods, the waters can now be harnessed to boost energy and water supply for household consumption. Consequently, this should cause a reduction in electricity costs and steady supply of water.

We take note of the declaration by Energy Cabinet Secretary Charles Keter that the hydropower dams are nearly 100 per cent full, meaning there is stability in energy supply. But this will only be meaningful if it translates to lower electricity prices as production costs reduce. Indeed, it is paradoxical that although hydro is an essentially cheap source of energy, electricity prices are exorbitantly high. In fact, they have just become unmanageable despite the government’s promise of affordable supply.

Admittedly, the high cost of electricity is a consequence of many factors — mainly high production costs that arise from, among others, Kenya Power’s reliance on independent power producers to augment its supply. At least 30 per cent of the energy supplied is generated by the IPPs, but their pricing is disproportionately higher than that of KenGen, the public power generator.

Last year, Mr Keter threatened to cancel the contracts of the IPPs for their exorbitant prices, arising from, one, their production models and, two, their dollar-denominated contractual terms hedged on high rates to cushion against currency fluctuations.

Adequate water supply in the dams means KenGen can now boost capacity and ensure increased power provision. Subsequently, the government can retire some of the IPP contracts.

But this is not to argue that water input alone is the major cause of high power tariffs. Kenya Power has terribly mismanaged electricity supply and billing. Several energy audits have revealed that a lot of power is lost during transmission. Worse, billing is heavily manipulated to raise cash with which to plug holes in the company’s books.

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A few months ago, a Kenya Power management team admitted before a parliamentary committee that the electricity bills have been grossly inflated. Unfortunately, they were never sanctioned for that. Last year, there was an outcry over electricity costs, which ended up in court. The matter has never been conclusively closed.

With dams already full, power generators and suppliers have no reason to continue charging the current high tariffs — unless they want to admit that theirs are faulty systems that lead to unusually higher operational costs. We, therefore, ask the energy regulator to step in and push for reduced power costs.





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