Written By: Faith Jemosop
If you’ve noticed that your electricity tokens from Kenya Power and Lighting Company (KPLC) are yielding fewer units for the same amount of money, you’re not alone. Many Kenyans have experienced this phenomenon, leading to questions about the underlying causes.
Several factors contribute to the decrease in electricity units received for the same monetary value:
1. Fuel Cost Charge (FCC) Fluctuations
The FCC is a variable component of your electricity bill that reflects the cost of fuel used in electricity generation. When global fuel prices rise, the FCC increases, leading to higher electricity costs and fewer units for consumers.
As of early 2025, the FCC has risen significantly compared to previous years. For instance, in January 2022, the FCC stood at around KES 4.63 per kilowatt-hour (kWh). By March 2025, it had surged to over KES 6.31 per kWh, largely due to spikes in global oil prices and increased use of diesel-powered thermal plants during drought periods when hydropower output is low.
Since thermal energy is one of the most expensive forms of power production (costing around $0.15–$0.20 per kWh), even a minor increase in usage causes the FCC to spike, leading to fewer units per token.
2. Foreign Exchange Rate Variations
Kenya imports a significant portion of its fuel and equipment for electricity generation. Fluctuations in the Kenyan shilling against major currencies like the US dollar can increase the cost of these imports, subsequently affecting electricity prices.
In 2022, the exchange rate was about KES 115 to the USD, but by April 2025, the rate had dropped to KES 150/USD. This sharp depreciation of more than 30% in three years has drastically increased the cost of importing fuel, spare parts, and machinery used in energy production.
Since many of Kenya’s Power Purchase Agreements (PPAs) are priced in dollars, KPLC ends up spending more in local currency, which increases the cost of electricity and reduces the number of units you receive per token.
3. Inflation and Economic Factors
General inflation and economic conditions can lead to adjustments in electricity tariffs. As operational costs for KPLC rise, these are often passed on to consumers through higher tariffs, resulting in fewer units for the same amount of money.
Kenya’s inflation rate reached 7.9% in 2024, driven by high food, transport, and energy prices. Inflation affects not only the cost of living but also the operational costs of utility companies like KPLC.
Maintenance of grid infrastructure, staff salaries, fuel purchases, and administrative overheads all become more expensive. The Energy and Petroleum Regulatory Authority (EPRA) adjusts electricity tariffs periodically to reflect these changes, leading to fewer units per shilling.
4. Power Purchase Agreements (PPAs)
KPLC enters into PPAs with various electricity producers, agreeing to purchase power at predetermined rates. Some of these agreements, especially with independent power producers, may have higher rates, influencing the overall cost of electricity supplied to consumers.
For example, KPLC must purchase power from the Lake Turkana Wind Power (LTWP) project at a fixed cost even if the power is not required at the time. The LTWP, which contributes 310 MW to the national grid, has a “take-or-pay” clause, meaning KPLC is obligated to pay for electricity whether or not it’s consumed.
This has cost KPLC billions in idle capacity payments since its commissioning. These contractual obligations increase the utility’s expenses and reduce the value of tokens to consumers.
The Role of Renewable Energy Projects
Kenya has invested in renewable energy projects to diversify its energy mix and reduce reliance on fossil fuels. One notable project is the Lake Turkana Wind Power Station (LTWP), which contributes significantly to the national grid.
While renewable energy projects like LTWP aim to provide cleaner and more sustainable power, they also come with financial obligations. For instance, KPLC is contractually obligated to purchase all electricity produced by LTWP, even if it’s not immediately needed. This arrangement can lead to increased costs for KPLC, which may be transferred to consumers.
Also read: MojaEV Kenya to Begin Local Assembly of Electric Vehicles from August
Kenya has entered into a 25-year deal with Ethiopia to import electricity. In 2023 alone, Kenya imported 706.9 million kWh, with Ethiopia accounting for 546.5 million kWh more than 77% of total imports. While Ethiopian hydropower is cheaper than diesel, these long-term contracts still add pressure to KPLC’s obligations, especially when demand doesn’t match supply.
The reduction in electricity units for the same amount of money has several implications:
- Increased Household Expenses: Households may need to allocate more funds for electricity, affecting their overall budget.
- Energy Conservation: Consumers might adopt energy-saving practices to mitigate higher costs, such as using energy-efficient appliances or reducing usage during peak hours.
- Demand for Transparency: There’s a growing call for KPLC to provide clearer explanations of billing components and how external factors influence electricity pricing.
Also read: Zambia Invites UK Firm to Deliver 5 Gigawatts of Clean Energy
While some factors affecting electricity pricing are beyond consumers’ control, there are steps individuals can take:
- Monitor Usage: Regularly check your electricity consumption to identify patterns and areas where you can reduce usage.
- Invest in Energy-Efficient Appliances: Using appliances that consume less power can lead to significant savings over time.
- Stay Informed: Keep abreast of announcements from KPLC and the Energy and Petroleum Regulatory Authority (EPRA) regarding tariff changes and other relevant updates.
Also consider switching to prepaid meters, which allow for better budgeting and real-time monitoring of consumption trends.
