Genesis was retained by an African energy company to compare the retail base electricity tariffs in Kenya to those of other selected countries in the context of a price application to the Energy Regulator.
The retail base tariff consists of generation costs (including fuel), transmission and distribution costs. This tariff is averaged across customer groups for a given year.
Putting the benchmarking of Kenya’s retail base tariffs relative to other countries into context, Genesis explored some of the factors which may account for differences in the retail base tariff such as access to electricity; generation mix; fuel costs; quality of supply; and subsidies.
The benchmarking results provided a sound indication of how Kenya’s retail base tariffs compare to the sample comparators. Based on the cross-country benchmarking study, we demonstrated that the increases in overall prices were reasonable.
Our analysis further led the utility to approach the building blocks of the overall price in a component-specific manner, which clearly linked the price movements to cost drivers. As a result, the company intends to request the regulator to develop a transparent price methodology, so as to enhance regulatory certainty and reduce the time involved in application processes.