Kenya Power has raised security deposits for post-paid electricity users, meaning that their bills would be higher this month.
Customers have received text messages alerting them that their deposits have been increased and that the additional amount would be added to their next bill.
They would be required to pay an additional Sh2,500 since “your present deposit is insufficient to support your contract,” according to the utility company. Please pay the same together with your bill.”
Existing and new customers will be affected by the increased levies, which will raise the cost of becoming connected to power and shifting to a new home.
Customers on post-paid plans used to have to pay a security deposit of at least Sh2,500, which Kenya Power now claims is insufficient to cover power bill defaults.
The electricity company has been dealing with an increasing number of delinquent invoices from retail and industrial customers and has increased security deposits to mitigate the impact of defaulters.
In June 2021, the company owed Sh29.66 billion, up Sh2.26 billion from the previous year’s Sh27.39 billion.
The utility company has written off Sh15 billion in bad debts from unpaid electricity bills, most of which have been outstanding for more than three months.
This has seen the utility company impair Sh15 billion of the Sh29.6 billion unpaid electricity bills as of June 2021, according to the company’s annual report.
It now relies on private debt collectors who take a percentage of the money they recover.
It has also so aggressively rolled out prepaid meters to ensure customers use only the power they have paid for.
The company’s finance and risk committee cited unpaid bills as one of the biggest risks to its fiscal position.
Other risks include changes in power demand, currency fluctuation, liquidity risks arising from rapid network expansion, and a heavy debt load.
The firm had hinted in its annual report that it would increase security deposits as a strategy for limiting its exposure to bill defaulters.
“The Company continues to install prepaid and automatic meters as strategies to minimise the risk of non-collection. This includes focus on early identification and letters of demand for higher security deposits,” it said.
Most of Kenya Power including large manufacturers are still on post-paid meters and pose the greatest risk of default.
The company sold electricity worth Sh20.57 billion through prepaid meters in the year to June 2021 up from Sh17.81 billion the previous year while Sh105.34 billion was earned from post-paid.
The outstanding electricity bills fell for the first time in five years by Sh900 million in the results for the six months to December 2021, giving it a significant financial boost.
