Electricity users will pay at least Sh4.70 more for each unit in August, piling fresh pressure to domestic and business costs at a time when inflation remains elevated.
The increase follows the latest monthly adjustments by the Energy and Petroleum Regulatory Authority (EPRA), which raised the Fuel Energy Cost Charge (FEC) to Sh3.51 per kilowatt-hour (kWh).
It imposed a Foreign Exchange Fluctuation Adjustment of Sh1.1777 per kWh and increased the Water Resources Management Authority (WARMA) levy by Sh0.015 per kWh.
The three adjustments, contained in Kenya Gazette notices dated August 14, translate into an additional Sh4.7027 per unit for consumers under the existing 2023 electricity tariff structure.
The increase comes after electricity prices had already featured among the pressures driving household costs.
Data from the Kenya National Bureau of Statistics (KNBS) shows annual inflation rose to 6.5 per cent in July from 6.4 per cent in June, with the Housing, Water, Electricity, Gas and Other Fuels category rising 3.2 per cent over the year.
KNBS also reported that the price of electricity for a 50-kWh consumer increased by 3.5 per cent between June and July, while the cost for a 200-kWh consumer rose 3.1 per cent during the month.
Under the July structure, a typical domestic consumer paid about Sh28.24 per kWh after taking into account the base tariff, fuel and forex adjustments, inflation adjustment, levies and tax.
Applying the latest increase would push the indicative cost to about Sh32.94 per unit, although the actual bill will vary depending on consumption and tariff band.
For a household using 30 units a month, that translates to an indicative monthly electricity cost of about Sh988.20, compared with Sh847.20 under the July calculation.
The higher bill also illustrates the significant role played by taxes and statutory levies in the final price paid by consumers.
Electricity bills include a 16 per cent Value Added Tax (VAT), which applies to the consumption charge as well as the fuel-cost and forex adjustments.
Consumers also pay a Rural Electrification Programme (REP) levy equivalent to five per cent of the cost of electricity consumed, alongside the EPRA regulatory levy and WARMA charge.
The National Assembly's inquiry into electricity costs has previously identified VAT as the principal national tax directly charged on electricity.
It noted that other sector-specific charges and levies also increase the final consumer bill.
This means an increase in a pass-through charge can have a multiplier effect because VAT is also applied to some of those components.
Beyond taxes and monthly adjustments, the structure of Kenya's power market has kept attention focused on the cost of electricity purchased from independent power producers (IPPs).
EPRA's latest adjustment shows just how significant foreign-currency exposure can be.
The regulator reported combined foreign-exchange gains and losses of about Sh1.4 billion in the electricity sector, with IPPs accounting for Sh1.04 billion.
Kenya Power accounted for Sh168.9 million while KenGen accounted for Sh145.3 million.
The figures highlight the sensitivity of power costs to contracts and financing arrangements denominated in foreign currencies.
Parliament has for years raised concerns about the cost of IPP contracts.
A Senate Energy Committee review found that IPPs generated about 28 per cent of electricity but accounted for 47 per cent of power purchase costs, raising questions about the pricing of power purchase agreements (PPAs).
The National Assembly subsequently called for greater scrutiny of PPAs, with lawmakers arguing that expensive contracts were contributing to the country's high electricity costs.
Parliament's more recent inquiry recommended competitive procurement and called for future PPAs to better match local costs with Kenyan shilling-denominated arrangements while retaining foreign currency for genuine foreign financing obligations.
The issue is particularly important because the cost of electricity is not determined by Kenya Power's retail margin alone.
According to Kenya Power, the fuel charge is passed directly to electricity generators and ultimately fuel suppliers, while the forex adjustment reflects foreign-currency costs such as project loan repayments.
EPRA said the August fuel charge was calculated from electricity generated and purchased during July, including thermal, geothermal and other generation sources as well as imports.
The figures show stark differences in generation costs.
Some isolated thermal stations recorded extremely high costs, including North Horr at Sh396.12 per kWh, Rhamu at Sh363.18 and Baragoi at Sh346.75.
"These are generation costs at specific isolated stations and should not be confused with the retail price paid by consumers."
Geothermal generation, by contrast, remains considerably cheaper, with several Olkaria units and other geothermal plants carrying a steam charge of about Sh3.75 per kWh.
The disparity reinforces the long-running argument for shifting Kenya's generation mix towards lower-cost sources while reducing reliance on expensive thermal generation and costly contractual arrangements.
The higher electricity charge will ultimately be felt beyond the monthly household bill.
Manufacturers need power to run machinery, supermarkets rely on refrigeration and lighting, while hotels, restaurants, bakeries, salons and other enterprises depend on electricity for daily operations.
For small businesses operating on thin margins, the additional cost could mean absorbing higher expenses, cutting other costs or passing part of the increase to consumers.
In June, the government withdrew a proposed retail electricity tariff review , leaving the existing tariff structure intact, but monthly pass-through charges continue to move with generation costs, foreign-exchange exposure and other sector expenses.
With inflation already at 6.5 per cent and electricity prices rising again, the August adjustment threatens to keep power costs firmly among the pressures confronting households and businesses.
Early this month, the Central Bank of Kenya (CBK) was forced to retain the base lending rate at 8.75 per cent in a bid to manage inflation.
The banking regulator indicated that it expects inflation to remain elevated in the coming months but insisted that it will remain within 7.5 per cent margins.
