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PROJECT BACKGROUND: KENYA

THE NEED FOR CONSUMER PARTICIPATION IN THE REFORMS PROCESS OF THE ELECTRICTY SUB-SECTOR

Susanne Rabisch, CUTS Nairobi

+ Introduction

15% of the Kenyan population are connected to electricity and a mere 1% of the rural population had access to electricity (Karekezi&Kimani 2004)

The Rural Electrification Programme: increase in connections from 251,056 customers in June 2010 to 309,287 as in June 2011 23.2% growth rate (KNBS 2012)

Installed capacity expanded by 8.6 per cent to 1,534.3 MW in 2011, while the total electricity generation rose by 8.4 per cent to 7,559.9 GWh in 2011

Total electricity consumption showed growth rate of 9% from 5,754.7 GWh in 2010 to 6,273.6 GWh in 2011 (KNBS 2012)

A snapshot of the Kenyan Electricity Sub-sector

+Objectives of Kenyan Energy Policy

“The overall objective of the energy policy is to ensure affordable, sustainable and reliable supply to meet national and county development needs, while protecting and conserving the environment”.

Policy objectives that aim at consumer protection and participation in the energy sector:

“ the protection of consumer interests” “ the promotion of diversification of energy supply sources to

ensure supply security” “ the promotion of healthy competition in the sector ” “ the improved access to quality, reliable and affordable energy

services ”

Ministry of Energy (2012)

+Brief Overview of Electricity sub-sector Reforms in Kenya

Partial unbundling: electricity generation from electricity distribution and transmission (Kenya Power)

Entry of private entities in electricity generation (Independent Power Producers IPPs) in addition to KenGen

Government-owned institution established to develop new electricity transmission infrastructure (KETRACO)

Establishment of the Energy Regulatory Commission in 2007 (on basis of The Energy Act 2006)

Establishment of the Rural Electrification Authority with a mandate to extend electrification to remote areas

+The Impact of Electricity Regulation

Investment Climate/Competitiveness - Economy

Cost/Reliability of Production - Private Sector

Cost of Living - Household Consumers

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The need and avenues for consumer participation in regulatory decision making in the electricity sector

+The Need for Consumer Participation in Regulatory Reforms of the Electricity Sector Legal and policy mandate to facilitate consumer

participation in regulatory reforms and consumer protection

Role of regulators: primary mandate to ensure consumer welfare (large scale industrial and small scale HH and MSMEs consumers)

Consumers’ interest should be heard because consumer are ultimately impacted by regulation (eg. electricity tariffs): Household consumer’s cost of living/quality of life Private sector cost of production- multiplier effect Investment climate for foreign investment – wider economic

impact

+The Need for Consumer Participation in Regulatory Reforms of the Electricity Sector Cont. The voices least represented are individual grassroots

consumers, private sector and other government agencies are better placed to influence the regulatory process

Civil society to act as a watchdog that ensures the voice of household consumers to be heard: CSOs to facilitate two way communication between regulators and average consumers

Communicate consumer concerns and recommendations to regulators

Communicate reform process (redress and complaints mechanisms, tariff setting procedures etc.) to consumers

+Avenues for Consumer Participation in Regulatory Reforms in the Electricity sector

Written comments to regulators and policy makers

Consumer Representatives/CSOs to engage in dialog with regulators

Public hearings (with average consumers)

Through Consumer Advocates (partnership between regulators and consumer representatives)

+Role of Consumers in Regulatory decision-making in the electricity sector in Kenya

Enabling legislation consumer participation in regulation and consumer protection in Kenya:

Electric Power Act 1997 The Energy Act, 2006

(ERC) Competition Act, 2010

(CAK) Consumer Protection Act,

2012

No clear understanding/awareness of enabling legislation

Lack of consumer awareness on avenues for consumer participation in electricity reforms

Missing link between consumer groups and civil society organizations to engage with regulators and policy makers

Need for clearly defined engagement strategy

Opportunities Challenges

+The Consumer Protection Act, 2012 Partnership Model of

consumer participation in regulatory decision making

Legal basis for a consumer representatives on the board of all regulatory bodies in Kenya

Including the Energy Regulatory Commission and the Competition Authority of Kenya

Effective, timely operationalization should greatly increase consumer voice

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CONSUMER CONCERNS IN ELECTRICITY IN KENYA

As found in the CUTS Study:

“State of the Kenyan Consumer” 2012

+Consumer Concerns in Electricity in Kenya(Asher & Sengupta 2012)

+Consumer experience when seeking redress in Kenya(Asher & Sengupta 2012)

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Conclusions

Consumer groups and CSOs require capacity building in order to be able to engage in the regulatory reform process of the electricity sector

CSOs would benefit from networking opportunities in which they can engage with policy makers and regulators to voice their concerns

Consumer-oriented regulation and policy making in the electricity sector has a profound effect on the livelihoods of household consumers, MSMEs and the Kenyan economy

There is a clear legal mandate for consumer protection and participation in regulatory decision making, which needs to be operationalized effectively