Kenyans are set to face higher electricity bills after the National Assembly's Committee on Energy directed the Energy and Petroleum Regulatory Authority (EPRA) to introduce new charges to cover the costs of rural electrification. The move is intended to allow Kenya Power and Lighting Company (KPLC) to recover billions of shillings it has spent on expanding the national grid to less commercially viable areas. The new charges, described as a pass-through cost, are expected to be incorporated into the base tariff starting from July 2026.

The directive transfers the financial responsibility for these projects from the National Treasury, which is mandated to reimburse KPLC, directly to the consumer. According to reports from Tuesday, November 18, 2025, the Treasury's outstanding debt to KPLC for rural electrification projects had accumulated to KSh 29.9 billion by June 2024. This figure is anticipated to grow as the government continues its push for universal electricity access. KPLC disclosures revealed that the Treasury had only paid KSh 810 million of the KSh 30.7 billion owed, exacerbating the utility's financial pressures.

Financial Strain on KPLC and Consumers

The core of the issue lies in the economic model of rural electrification. While a critical national development goal, these projects often do not generate enough revenue to cover their construction and maintenance costs. Data from KPLC shows that households in rural areas consume significantly less electricity, with an average monthly spending of KSh 217, compared to the national household average of KSh 830.27. This disparity makes it difficult for the utility to recoup its investment without external financial support.

The parliamentary committee's solution is to embed a recovery mechanism within the monthly power bill. “Within six months upon adoption of this report, Epra institutes a review of the pass-through costs to introduce a recovery mechanism for the operating deficits for RES [rural electrification projects] and that in the next Tariff Control Period, the same be factored in the Base Tariff,” the committee's report stated. This decision comes at a time when Kenyans are already grappling with a severe cost of living crisis, driven by rising prices for essential goods like food, fuel, and transport. Electricity costs have been a significant contributor to this strain, with multiple tariff adjustments in 2025 already increasing the financial burden on households and businesses.

Regulatory Concerns and Economic Impact

The directive has raised concerns within the regulatory body itself. EPRA's Director-General, Daniel Kiptoo, questioned the fairness of compelling consumers to pay for a government commitment. “If the government told Kenya Power to undertake RES with the commitment to reimburse expenses, then we are asking ourselves is it fair to force consumers to pay this money?” Kiptoo stated on Tuesday, November 18, 2025, adding that the authority would seek advice from the Attorney General before proceeding.

Economists and consumer advocates have long warned that high energy costs stifle economic growth. For businesses, particularly in the manufacturing and small and medium-sized enterprise (SME) sectors, electricity is a major operational expense. Increased tariffs can reduce competitiveness and may be passed on to consumers, fueling inflation. For households, higher power bills reduce disposable income, forcing cuts in other essential areas like food and healthcare. Kenya's electricity prices are already among the highest in the region, a fact attributed to factors like expensive long-term contracts with Independent Power Producers (IPPs), system losses, and foreign exchange fluctuations.

Broader Energy Sector Reforms

This tariff directive coincides with other significant reforms in Kenya's energy sector. On Wednesday, November 12, 2025, Parliament voted to lift a nearly seven-year moratorium on new Power Purchase Agreements (PPAs) with IPPs. This move is aimed at averting a potential power generation crisis as electricity demand grows, having reached a peak of 2,362 MW on July 25, 2025. However, lawmakers have attached new conditions to future PPAs, including capping wholesale prices at $0.07 (approx. KSh 9.04) per kilowatt-hour and shifting towards a competitive auction system for procuring new energy projects to ensure more competitive pricing. The committee also recommended that non-commercial projects, including rural electrification, be transferred from KPLC to the Rural Electrification and Renewable Energy Corporation (REREC) to improve the utility's financial health. While these long-term reforms aim to lower costs, the immediate directive to pass on rural electrification debts to consumers signals more financial pressure for Kenyans in the medium term.