This archive report was first published on 3 December 2019.
Kenya has been blessed with heavy rainfall over the past two months, resulting in the country's dams filling up for the first time in a long time.
According to Energy Cabinet Secretary Charles Keter, the hydropower dams are nearly 100 per cent full, providing stability in energy supply.
However, this development will only be meaningful if it translates to lower electricity prices as production costs reduce.
Despite hydro being an essentially cheap source of energy, electricity prices in Kenya are exorbitantly high, making them unmanageable.
One of the main factors contributing to high electricity costs is the high production costs arising from 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.
Energy Cabinet Secretary Charles Keter had previously threatened to cancel the contracts of the IPPs for their exorbitant prices, which arise from their production models and dollar-denominated contractual terms hedged on high rates to cushion against currency fluctuations.
With the dams full, KenGen can now boost capacity and ensure increased power provision, allowing the government to retire some of the IPP contracts.
However, 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, with several energy audits revealing that a lot of power is lost during transmission.
Furthermore, billing is heavily manipulated to raise cash with which to plug holes in the company's books.
Given the current situation, 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.
