Availability of Hydro Power Plants and Electricity Consumer Prices: a Case Study of Kenya Electricity Generating Company Limited

Abstract

The objectives of this study were to determine whether the availability of the KenGen Hydropower plants impacts on electricity consumer prices; to determine the general impact of the Power Purchase Agreements on the electricity consumer prices; and to interrogate the impact of liberalization in the electricity subsector on the electricity consumer prices. Primary data was collected by way of questionnaires which were administered to senior KenGen Management Staff while secondary data was obtained from Kenya Power and validated by the same data from Energy Regulatory Commission and KenGen. Primary data was analyzed using descriptive statistics while secondary data was analyzed using regression analysis model. One major finding of the study is that there is a negative relationship between consumer prices and Availability of the KenGen Hydropower plants. The study further demonstrated that Availability of the KenGen Hydropower plants does not affect the consumer prices. The use of the model developed to forecast the consumer electricity price is therefore not recommended as one might get predictions that are inaccurate. The study found that about 70 percent of KenGen’s power generation consisting of hydropower was not a good strategy for consumers and KenGen needed to invest more in other energy sources. The study also emphasized that KenGen has the capacity and strategy to bring down electricity prices at the same time electricity prices would be lower if other independent producers also owned hydro power plants. This is also in line with the opinion of majority of the respondents that electricity prices would come down in the future.