There is need to end the Kenya Power monopoly
As I write this, the social media is abuzz with Kenya Power customers venting their frustration at the electricity distributor over a message they sent to all their customers on prepaid meters. This message was on their intention to deduct 30 Kwh from their existing units loaded on their meters so as to recover a similar number of units that came pre-loaded in the meters during installation. The truth of the matter is no matter how vitriol their “tweets” towards Kenya power will be, It will go ahead and deduct the units from users’ meters and the users will still remain their customers.
After the break-up of the East African Community, the existing power company (East African Power and Lighting Company) broke up into three companies for Kenya, Uganda and Tanzania with the Kenyan one taking the name Kenya Power and Lighting Company (KPLC), KPLC was a vertically integrated entity responsible for the generation, transmission and distribution of electric power in the country. The Kenya electric power act of 1997 led to the breaking up of this vertical integration and three entities were formed, Kenya electricity generating company (Kengen) and Kenya Power and lighting company. The role of power generation was now moved to Kengen. The third unit was the Electricity Regulation Board which was a semi-autonomous regulator. This act also allowed the introduction of independent power producers (IPPs) who could now generate power and sale to KPLC at competitive rates to the government-owned Kengen. Subsequent acts of parliament such as the energy act of 2006 led to the refinement of the 1997 act and addition of the energy regulatory commission and the establishment of KETRACO (Kenya Electricity transmission company) which took over the role of electricity transmission from KPLC was further established. This left KPLC with only one role: that of distribution of electricity.
What all these acts have failed to do, is to open up the customer facing end of the whole electric power value chain to competition. KPLC which recently re-branded to Kenya power, still maintains the monopoly of electricity distribution in the country. The result is poor service delivery to option-less customers who have now resorted to social media to air their frustrations.
Kenya Power has been struggling with the billing and collection of post paid electricity consumption, the process was very labor intensive and led to negative cash flows. The adoption of prepaid meters transferred the meter reading and top up to the end-user hence saving on labor costs and at the same time instantly converted their cash flow into positive cash flow as users now pay before consumption. It’s the dream of any business to wield the powers to instantly convert cash flows that way.
With all this, I am of the opinion that the 2006 energy act needs to be repealed to allow competition on the electricity distribution front.
How will it happen? will Kenya Power competitors have to build parallel networks to supply electricity to end users?
The answer is No. what the government needs to do if change the law and make Kenya power an infrastructure provider and let it run the existing electricity network in a 50:50 partnership with private companies. It will then lease this network to several private/independent power utility companies that will buy electricity from Kengen and IPPs and pump it onto the network that they have leased from Kenya Power. end users can now chose which supplier they want to use (based on price, service delivery etc) and the install a meter from that company. They will now be topping up the meter with tokens bought from the meter supplier and hence effectively using their electricity. Users can therefore have several meters from different suppliers and switch across them depending on prevailing prices and tariff offers (Just like what is currently happening in the mobile sector). Because of the 50:50 partnership with a private player, Kenya power can upgrade this network and make it more resilient and less prone to failure/down times. While at it, they can also make it a smart grid.
How will the different “electricities” (for lack of a better word) from the different power companies that run on the Kenya power cable be identified? This is easy to do, let each company add a low harmonic modulating carrier to the 50Hz supplied by Kengen and IPPs and then transmit it. This carrier tone can only be decoded by the correct meter and returned to the original 50Hz for use. In more familiar terms, it will work just the same way a Safaricom SIM card can only associate with the Safaricom network and not Orange or YU.
This approach will go a long way in introducing competition to the distribution end of the power supply chain, this competition will lead to improved service delivery to the consumers.
Vote for my blog under “Best technology blog” at ow.ly/jXEhM. Thank you.