EPRA, Kenya Power in Yet Another Tussle
Kevin Namunwa  |  Oct 14, 2020

Energy sector regulator Energy and Petroleum Regulation Authority (EPRA) has rubbed shoulders with Kenya Power over the regulator’s inclusion power purchase agreement (PPA) negotiations to reduce oversupply of electricity in the market.

The tussle between the two has been existent for some time now as they also did not see eye to eye on the matter of delayed electricity tariffs.

The electricity distributor says a separate entity needs to be established to oversee signing of power deals which have overburdened it due to excess supply that has to be paid for.

In a ten-page confidential letter addressed to the Ministry of Energy, Kenya Power also blamed EPRA’s approach to address the challenge of excess supply through delayed project commercialisation dates for the already signed PPAs.

“The sectors’ approach towards addressing the issue of excess generation as recently guided by EPRA, is shifting of commercial operation dates and introductions to take and pay clauses in PPAs,” reads the letter in part.

“It is noteworthy that with the current slow growth in peak demand, the shifting of project Commercial Operations Dates (CODs) will not address the imminent oversupply challenges.”

Kenya Power further said EPRA also expressed fears that the country had overcommitted to power generators in a move that may prove difficult for the business to remain sustainable under the stagnated tariffs and lagging demand for electricity.

The power retailer is now asking for a new entity to be set up to engage power generators in signing of new deals, suggesting its discomfort with the way EPRA has allowed several such deals to be signed in the recent past.

“Clearly a different model is required that will deliver revenues for these projects at the same time reduce retail tariffs as per government policy. One option is to create a separate entity dedicated to entering into PPAs with generators on behalf of the government,” Kenya Power wrote to the Ministry through Energy Principal Secretary Joseph Njoroge.