Strategic responses to challenges of energy regulation in Kenya by the Energy Regulatory Commission

Abstract

The energy sector in Kenya underwent a tumultuous period occasioned by the harsh climatic conditions that affected the rainfall pattern. This compelled KenGen to generate electricity using petro-thermal sources which are more expensive with the resultant costs being passed to the consumers. However, liberalization of Energy Sector in the late 1990’s culminated in the enactment of the Electric Power Act, 1997 that led to the creation of Electricity Regulatory Board (ERB) to regulate the electric power sub-sector. Further regulatory reforms led to the transformation of ERB to ERC with the mandate to regulate the entire energy sector.

The objectives of the research were to identify the strategic challenges facing ERC and strategic responses it has employed to cope with the same. A sample size of 12 respondents was targeted consisting of Director General/Chief Executive Officer, Directors and Senior Managers of ERC.

The main findings showed that ERC has put in place strategies to address the challenges and position itself to the regulatory regime. The challenges include electrical power tariff review, institutional capacity building, communication strategy, legal and regulatory framework, organization culture. However, implementation of these strategies has been hampered by the electrical power tariff review that has ended up in the Energy Tribunal and the High Court between KenGen and KPLC/ERC, inadequate institutional capacity which has affected operations of department that include petroleum and renewable energy, lack of sufficient office space to take on board additional staff,

In view of these findings, the recommendations for management consideration would be to build capacity by recruiting qualified additional staff, fast track the acquisition of office accommodation and changing the institutional culture by encouraging team spirit among staff.

This study was based on a sample limited to Energy Regulatory Commission and involved only senior managers in the organizations and did not involve lower levels of employees. Thus the results may not fairly represent views of those employees not included in the study.