Kenya Power set to pay consumers for blackouts

By Brian Ngugi

Businesses that incur financial losses due to power blackouts will receive compensation from Kenya Power if proposed regulations by the energy regulator are adopted.

The draft electricity supply regulations published Tuesday by the Energy and Petroleum Regulatory Authority (Epra) seek to compel the power utility to compensate consumers for financial losses, equipment damage, physical injuries and death due to power outages.

Frequent blackouts due to supply shortfalls and an aging infrastructure have forced most businesses and wealthy customers to have stand-by generators.

Currently, Kenya Power offers compensation for injuries and damaged kits, but does not compensate domestic and business customers for financial loss resulting from being left without electricity.

Now, Kenya seeks to adopt the model in most European countries that demand utilities compensate users whose homes and businesses are cut off from power for prolonged periods.

This will put pressure on Kenya Power, which is struggling with losses and mounting debt that has seen it default on supplier dues, especially electricity generators like KenGen.

“A licensee shall be liable to pay appropriate compensation to a person if due to failure, poor quality or irregularity of electricity supply, the person incurs damage to his or her property, financial loss, loss of life due to negligence or avoidable default by the licensee, provided that the breach is reported in writing within thirty days of the breach,” say the draft regulations.

“Where a licensee is to pay compensation to a person, the licensee shall, subject to these regulations pay the amount specified, or in kind, to the person within three months after determination of the claim.”

Manufacturers, commercial building owners, warehouses, farmers and other small businesses like salons and barber shops all use electricity and an extended outage usually translates to losses and additional expenses from using generators. Claims from these businesses could see Kenya Power pay hundreds of millions of shillings as compensation.

Kenya Power sank into a pretax loss of Sh7.04 billion for its financial year to the end of last June.

The proposed law is intended to spur a faster response from the power utility in the event of outages.

Power bills

Business leaders say the blackouts are curbing economic growth.

In 2015, the government rejected a Bill that required Kenya Power to compensate businesses whose power is cut off for more than three hours within a day.

Kenya Power was expected to include the compensation in power bills and use it to offset future electricity bills, said the proposed law that had been sponsored by Mvita MP Abdulswamad Nassir.

The draft regulations do not specify the number of hours consumers must be without electricity for Kenya Power to offer compensation.

Affected customers will automatically lose their right to seek compensation from Kenya Power in cases where they have tapped power illegally and when third parties like vandals, falling trees, cars or planes interfere with electricity networks.

A declaration of force majeure due to disasters like earthquakes will excuse the company from contractual agreements.

Kenya Power will also be cushioned from making compensations where it’s the fault of the affected persons or if they fail to report the breach in 30 days.

According to the proposed regulations, a claim for compensation shall be lodged in writing with Kenya Power by the affected business within 12 months after they suffer a breach.

Kenya Power needs to spend billions of shillings to upgrade and expand its network in the coming years and revamp the dilapidated transmission network to keep up with growing demand.

Solar power

The listed utility has instead had to contend with increasing customer connections, particularly in rural areas. It has more than doubled its customers from the 3.7 million users it had by the end of June 2015.

The growing shift to solar power systems by heavy-consuming industrialists seeking reliable and cheaper supply has rattled the electricity distributor amid thinning revenues.

The utility firm said some of its industrial customers — who account for about 54.8 percent of its sales revenues — are gradually shifting to own-generated solar power, dealing it a further blow.

Several companies, universities and factories have turned to solar photovoltaic grid-tied systems to supply power for internal use to ensure reliable supply and reduce operational costs.

This article was originally published by Business Daily. [Photo: Nation Media Group]