Economy

Customers to remain yoked to Kenya Power despite end of monopoly


A technician repairs a power line. FILE PHOTO | NMG

Millions of existing Kenya Power customers will be tied to the power utility indefinitely despite the State opening up the electricity distribution market to other firms.

The Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024 have barred the existing Kenya Power customers from decamping to other firms set to enter the electricity distribution space.

Energy Cabinet Secretary Davis Chirchir gazetted the regulations last month, as the State moves to end the monopoly that the power distributor has enjoyed for decades.

The regulations say that existing Kenya Power customers will not be allowed to enter deals with the other distributors, in clauses that silently protect the utility firm from customer defections en masse.

Additionally, the regulations have not prescribed a transmission period upon which Kenya Power customers will be able to decamp.

“Subject to section 145(4) of the Act, a licensee may supply a consumer provided that the said consumer has no existing contract for supply of electrical energy with any other licensee,” the draft regulations read in part.

“Subject to section 145(4) of the Act, a consumer shall choose his retail supplier provided that the said consumer shall not have two supply contracts for the same premises.”

The clauses mean that the over 9.2 million homes and businesses will be stuck with the State-owned power distributor for years, with official records showing that customers are staying in the dark for about 115.73 hours annually.

It remains unclear whether Mr Chirchir will make changes to the particular clauses and introduce a transition period for existing Kenya Power customers to opt for the new distributors.

There have been fears that opening up electricity distribution to other players would lead to huge defections by disgruntled customers.

Read: MPs disclose plot to end Kenya Power monopoly

Frequent outages in addition to costly bills are fueling a sharp rise in the number of potential and existing customers opting for alternative electricity sources, mainly solar and biomass.

Big firms such as Kenya Breweries, Bamburi Cement, Carbacid Investments, Africa Logistics Properties, and Mombasa International Airport are some of the leading electricity consumers who have put up alternative electricity sources.

Wealthy homes are also putting up solar systems in a bid to end reliance on Kenya Power’s supply besides cutting bills.

Power transmission

Under the regulations, Kenya Power and the Kenya Electricity Transmission Company (Ketraco) will allow other firms to use their transmission and distribution networks to transmit electricity to consumers, upon payment of wheeling charges.

“A transmission or distribution licensee shall provide non-discriminatory open access to its transmission or distribution system as the case may be for use by any licensee or eligible consumer upon payment of wheeling or use of system charges,” say the regulations.

Wheeling charges refer to the money paid to a system owner (in this case Kenya Power and Ketraco) by other firms who wish to use the system to transmit electricity.

Opening up the electricity market means that power generators, that is KenGen and independent power producers (IPPs), will also have the option of selling their electricity to distributors other than Kenya Power.

Building an electricity transmission network is capital intensive and the open access concept is set to ease entry of firms that have for years been keen to enter the power distribution fray.

The regulations come five years after Kenya enacted into law the Energy Act, 2019 that opened up the country’s electricity distribution to competition.

Kenya Power had 9.2 million customers as of June last year, but the period marked the slowest rate of customer additions at 318,217.

The State electricity distributor has previously raised concerns about the rising number of customers, especially the big consumers like industries shifting to solar power systems.

 [email protected]

End

To Get The Latest News Update

Sign up to Our Subscription.

We don’t spam! Read our privacy policy for more info.

To Get The Latest News Update

Sign up to Our Subscription.

We don’t spam! Read our privacy policy for more info.