The headache of unpaid power bills has begun manifesting on Kenya Power’s bottom line after revenues it netted from households fell for the first time in six years.
This is despite the utility firm increasing the level of power supplied to the homes.
Kenya Power’s revenue from household consumers dropped 1.6 per cent to Sh43.21 billion in the financial year to June down from Sh43.91 billion last year for the first time since 2015 when the earnings slightly dipped to Sh30.89 billion from Sh31.02 billion in the preceding year.
This is despite the firm increasing the units of electricity sold to these households by 4.9 per cent during the year to 2,630 gigawatt-hours (GWh) up from 2,508GWh last year with households increasingly failing to clear their electricity bills.
This, as the utility added 283,859 new households to the grid in the FY 2020/21, taking the number of homes connected to the mains to 6.05 million up from 5.77 million last year, potentially exposing it to higher defaults on unpaid bills.
Unpaid bills
The company has lamented the rapid increase in unpaid bills by its customers in recent years.
Kenya Power’s unpaid bills hit Sh29.66 billion in the year to June, 60 per cent of which were owed by households.
Meanwhile, 20 per cent of the unsettled bills are owed by small and medium-sized enterprises (SMEs) and only 10 per cent by large industrial consumers.
Meanwhile, the company recorded a drastic increase in earnings from large industrial power users to Sh73.88 billion up from Sh62.81 billion last year, cementing their position as the most important customer segment of its bottom line. The finance and risk committee of the company placed the unsettled customer bills at the top of the biggest risks to the firm’s financial position.
Bad debts
The firm has already written off Sh15 billion in bad debts from unpaid electricity bills, most of which have been outstanding for over three months.
“Translating electricity sales into revenue earnings for the company is paramount in ensuring optimal financial performance of the business,” said the utility. “Overdue bills, therefore, hinder the financial health of the business thereby limiting the sustainability of the company,” it said.
However, the company remains upbeat that its new strategies including use of prepaid meters, disconnecting power supply and use of private debt collectors will help it recover much of the money owed by its customers. BY DAILY NATION