Independent power producers taken to task to reduce the cost of power

After it has been a heated debate on the high cost of electricity the Departmental committee on Energy been tasked to investigate the causes of high cost of electricity in the country.

The motion before Parliament was moved by Laikipia County Woman Representative Jane Kagiri, in April, 2023 pin pointing out that Kenya Power has entered into Power Purchase Agreements (PPAs) with both KenGen and Independent Power Producers (IPPs) which makes it [Kenya Power] procure electricity from them at unregulated rates.

During the submissions by the deputy auditor general Stanley Mwangi standing in for the auditor general, on the audit issues related to costs of electricity the Auditor General told the committee that Any idle capacity on the IPP is borne by the consumer due to capacity charge contractual obligation and will extend through the life the contract which is normally twenty (20) to twenty-five years (25).

The auditor general hinted out to the previous plans to initiate the cost of electricity downwards.

“Although the Management had previously indicated that plans were underway to re-negotiate the capacity charges downwards on the existing PPAs and align commercial operation dates of the PPAs in line with the Company’s medium-term power demand such that there is no excess power supply and generation by Power Producers, there has been no evidence on these negotiations. In the meantime, the Company continues to bear the high fixed capacity charges as the initiatives has not been implemented.” Stanley Mwangi said.

In addition, according to the Auditor General in the presentation he told the committee that the Power Purchase Agreements (PPAs) did not have a capacity charge revision clause and therefore there may be no legal framework that can be used to initiate these revision hence can be purely dependent on the goodwill from IPPs to renegotiate the agreements.

The auditor general recommended before the committee that management should evaluate Power Purchase Agreements and seek for of the rates to make them reasonable and low enough for the producers with reasonable margins without overloading the consumer.

Furthermore, Nancy Gathungu led group has recommended with finality that the Management should develop and implement strategic initiatives to improve Systems efficiency by reducing both commercial and technical loses through benchmarking with efficient power utilities in the world.

In order power to go down according to the Auditor General, the giant power producer Kenya Power and Lightening Company should harmonize the key elements raised affirming that her voice will give a voice of reason through annual financial compliance audits and the periodic performance audits.

Kenya Power and Lightening Company through the CEO responding to the committee affirmed that KPLC mandate is to procure adequate capacity to ensure supply security for the country. In doing this, KPLC procures power from both KenGen and the IPPs with payment being done to cover two components which is Capacity charge and Energy charge.

The CEO told the committee that the company is facing challenges to achieve the mandate as they have witnessed the System losses and commercial challenges and heavy thermal sources has generated to the high cost of electricity and illegal connectivity.

Hon. Vincent Kawaya the committee chairman discourage and vowed to end the illegal connectivity to clean have a clean connection which will lead to low power supply. Kawaya urged that the KPLC management should use the qualified personnel to go after this before to tame the illegal connectivity of power.

“So this committee will also not allow and will encourage you of course to suggest the best way possible to tame this illegal connectivity because that start of collapsing of the organization, we have to reach out together if it is overwhelming” Hon Kawaya directed.

Director of REREC Peter Mbugua received praises from the committee as Borabu member of Parliament told the committee that REREC has sent the contractors to the ground and he has uploaded the moves taken to start connectivity in the rural areas of Bomachoge Borabu as per Hon Eng. Nolfason Barongo who is a member of the committee confirmed the positive impact which has been felt in the ground.