Tuesday, August 26, 2008

Electric Shock



Last month’s electricity bill from KPLC was an all-time high, and who would have thought it could still go up? This month it’s Kshs. 2,590 ($39) – up from Kshs. 1,860 last month. Consumption was ‘161 units’ costing Kshs. 1,000, but that was exceeded by their fuel costs [billed at 769c per kWh – whatever that is ] that added another Kshs. 1,240 to the bill, followed by all the various other government tax and regulatory percentages tacked on to everyones’ bill.

Again ‘fuel costs’ are to blame - Who does KPLC buy fuel from? Retail outlets? If I bought my own fuel, and sold it to KPLC I’d probably make a profit. KPLC spent 14 billion on fuel last year - about the same as Kenya Airways [Kshs. 15.6 billion, but who were able to reduce their fuel bill this year by 5% through hedging contracts] and that's three time as much as electricity generator Kengen who spend about Kshs. 5 billion on fuel [they have a competitive bidding process - to reduce fuel costs, and Total has the contract now] - but I hope KPLC who only distribute electricity address their fuel procurement process in future before passing all costs on to costs to their over-burdened consumers and taxpayers.

So how much are you electric bills this month?

22 comments:

Anonymous said...

'Who does KPLC fuel with? Retail outlets' funny stuff, thank you your blog is a must read, the business pieces are delivered in a superb manner...maybe you should consider moving to 'shags' I live in Gachie 16km from Nai and the elec bills are still managable...we have a whole, a whole lot of appliances and we paid 1460 last month!

John Maina said...

Interesting enough we are struggle with the same issue of high utility prices here in U.K.

Proud Kikuyu Woman said...

About $30, actually.
Consider applying for the CFO position @KPLC. Bwana you may help them figure that stuff out.
Anon, how much is the Gachie-Nairobi fare peak time?

coldtusker said...

Actually, there is more to that... you need to research more... you are shooting the messenger...

I am disappointed you are doing this purely out of emotion but not facts. Do you want a copy of their 2006-7 annual report?
(2007-8 is not out. Yet.)

1) KPLC is NOT the most efficient firm out there but the looting by gichuru and his fuck-buddies really ran it down.

2) KPLC is FORCED to buy 'thermal'electricity from the IPPs... and the high cost of fuel is passed on. It is these IPPs who should 'compete' for the lowest cost of fuel. KPLC is a mere 'distributor'... Do you can't blame KPC for the sourcing of high-cost fuel?

3) KPLC runs only 2 small diesel plants. 1 is in some god-forsaken part of the country which is too remote to run transmission cables to... So... the difference would be negligible even if KPLC hedged?

4) KQ knows/estimates their fuel consumption yet hedge only 80% of their needs. KPLC relies on KenGen to supply the bulk of the electricity. It is KenGen who should determine/estimate what they can produce from Hydro and Geothermal. Why would KPLC hedge on fuel (hedging is NOT free) when they are NOT the producers and are NOT allowed to own 'production' facilities?
(The 2 facilities mentioned are too small to matter).

5) KPLC does not buy fuel. The IPPs do. The contracts are not negotiated by KPLC though they have a role. The Ministry of Energy is the lead party. Do you smell bribes?

6) Finally, TAXES... the fuel is taxed BEFORE it is used to produce electricity... so the real burden relating to taxes is MUCH higher... I believe at least 30% of the fuel surcharge is from 'hidden' taxes.

7) Bad debts, etc. KPLC can't control the thieves and bad debtors. They need the help of the police & courts. This is Kenya. Let's call a spade a spade.Neither work unless they are bribed.

Banks... I hope you understand that many folks read your blog... you need to be balanced... well, it is your blog... but I hope you are balanced in your views/opinions.

Rafiki said...

Mine more than doubled in two months time, unbelievable!
International oil prices have come down 20% from their highs now, so KPLC should bring down their fuel surcharge again, but of course they will be reluctant to do so, just like the petrol stations have not brought down fuel prices.
It also depends on when they record your meter, for some months (if KPLC has not actually come to note down the meter readings) it is based on 'estimated' consumption.
Should we pray that oil will soon be discovered in Kenya by the Chinese, or would it bring more trouble than blessings? (look at Nigeria and some other African oil countries)
Or should KPLC focus more on alternative energy sources. We have a lot of sun in the Chalbi desert for sure, and have not exhausted our geothermal capacity either.
Anon: I thought we were paying the same for electricity all over Kenya???

Ssembonge said...

My last heating gas bill (hot water for now) was $31.84 and my electricity bill (AC mostly) was $103.

Come winter, I'll be paying around $30 for electricity and $200 plus for the heating bill.

I hope that makes you guys feel better.

MainaT said...

Bills are up everywhere. In some countries you can at least gt a fixed payouts.
I am at a loss to understand why KPLC needs to layer on a special fuel cost.
The power industry is crying out for compe in distribution and generation. KenGEn is not very efficient. Hydro for example is generated using oil-driven machines. Which is expensive. geothermal has some limited potential but is very expensive to generate-at least the initial costs.
KPLC is inefficient. It losses about 23% of the power it buys from KenGen and the IPPs.

Shiko-Msa said...

I got my dreaded power bill just yesterday. 3,400/- up from 1,920/-. I don't have it here with me but I remember noting that fuel charge was almost as high as consumption. I hope they're not going up again.

But Ssembonge yours is no joke!

pink m said...

Mine was 2,203 and I live alone in a sinlge bulb bedsitter. I'm thinking may be I'm paying someone else's bill too, ama my old fridge is doing me in.
Before I paid 1,000 bob.

I really don't care about the whole fuel or no fuel argument, all I need is some form of efficiency. How does ESKOM SA do it? *off to research on that

coldtusker said...

pinkm: ESKOM is subsidised by the SA gov't.

They are also running into trouble as the post-apartheid gov't has not allowed enough price increases thus dis-investment and under-investment in the sector are causing them problems as they try to meet SA's needs.

Joram said...

I just got my bill.I was shocked - its 5050, up from 2261 last month. The fuel cost charge was 2153. Coldtusker, thanks for the insight.

Shiko-Msa said...

PinkM someone might be ripping you off. I once paid someones bill along with mine for a good 1 year. A corrupt landlord I think had colluded with Kenya Power guys to connect cables from our meter to a neighboring house. Once I left the house for a whole month and switched off everything and still got a big bill. Check out that possibility.

Anonymous said...

These bills amount to nothing if you live in New England.

Consider this (home heating oil only):
In 2006, my bill was $1750
In 2007, my bill was $2240
In 2008, so far, the last per-gallon rate I was quoted is ~100% (from $2.45 to $4.35) so I am looking at close to $5000.

Moving back to the Equator. Hii maneno siwezani nayo.

Anonymous said...

Coldtusker, thanks for the largely accurate clarification on the power industry dynamics that lead to the fuel surcharge on the bill. It gets a little more complicated when you factor in the formula used by the Electricity Regulatory Authority to calculate just how much of the cost can be passed on to consumers. Under current conditions where Kengen is conserving dam water following failed rains, our bills could easily go up by a further 15 to 20%. Sorry for the bad news. KPLC shareholders will be happy to hear that this would have shown up as a cost on the company's P&L.

adam cartwright said...

the electricity charging mechanism is structured to reward effeciency at the consumer level. ie. the less u use up to a certain limit the better.

measured in units.
1--1500 units pay 6 shillings per unit ie kilowatt hour ie the number of watts measured in thousands consumed by ua appliance in one hour.

1500--- 3000 units pay 8 shillings and ten cents per unit.

anything above 3000 units you pay 16 shillings per unit.

the more u use the more you pay. that chap who was saying his is rural and thus is low is doing low consumption. if you have a fridge iron box tv etc then you get the drift. the thing is to do what the prime minister siad: find alternative sources.... his proposal was a 2000 megawatt nuclear reactor... whats ua proposal... dont just whine?

picture this our total installed capcity is 1300 megawatts... iran with its so called problems has an installed capacity of 41,000 megawatts, yes thousands? u check south africa india china? all of them have a lot but the whole question is demand and supply. thats why the iranians are doing well, their demand is low... southa frica is a bit pressed as is the states in some areas and soon china....

Anonymous said...

Why doesn't a country like kenya invest in solar energy? it would not only be cheaper,it would also be better for the environment.

bankelele said...

Anon: transport costs to Gachie and time spent on Thika road are two strikes that may cancel out my high bills

John Maina: I’m sure with winter heating bills

PKW: no vacancies there, and true about Gachie

Coldtusker: at the end of the day they are at the mercy of their main shareholders, maybe I should become one too. I’d also like to see some IPP shares if I could – Tsavo, Rabai, maybe even Mumias now that they are going to join the grid. Meanwhile Unilever have been generating hydro-electricity since 1929 but since KPLC (Govt) offers a ridiculously low purchase price, they only use the stima on tea farms. Please e-mail me a PDF if you have one of KPLC – interested in shares

Rafiki: you too? Seems to be a pattern. I don’t believe they have read my meter in a while

Ssembonge: feel much better,

MainaT: they have tried to diversify, doing fibre, embracing e-messaging, but ultimately the management issues (expatriates vs. government) are a factor. The loss of power (23%) is shocking, and of course the vandalism they face (how desperate is one to have to risk stealing fuel from a transformer?)

Shiko-Msa: you too

Pink M: that has been known to happen, especially when ether are a lot of construction developments in the neighborhood

Joram: has anyone’s bill not doubled?

Adam Cartwright: are all my readers in the same bracket? All our bills have doubled.

Anonymous said...

@Proud kikuyu woman...Gachie is expensive fare wise...50 peak hours but in the morning you can leave the house at 7 or 7:15 and still be on time...virtually no Jam! We're off Limuru road

Anonymous said...

Perhaps our answer lies in Windmills! is anyone out there tryin hit out, wind driven trubines or whatever... I'm not an expert but I think it would help with alternative power generation

just what? said...

anon,talking wind energy? see
http://english.chosun.com/w21data/html/news/200703/200703190005.html

microwindmills, starting at only $25. too bad if you're kenyan, for that's a whole month's income...

Jaime said...

i got my bill at 4400 i normally pay 2000-2200.it practically doubled. i dont even know how to deal with this.anyone with any bright ideas on reducing on consumption?

Rafiki said...

Jaime: there are indeed some ideas to cut your electricity bill (including not using your cooker as a room heater by the way) and I have just posted them on my blog. Hope this helps.

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