Laws of Kenya ActiveThe Energy (Electricity Tariffs) Regulations
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LAWS OF KENYA THE ENERGY (ELECTRICITY TARIFFS) REGULATIONS NO. 10557 OF 2023 Revised and published by the National Council for Law Reporting with the authority of the Attorney-General as gazetted by the Government Printer www.kenyalaw.org published by the National Council for Law Reporting with the authority of the Attorney-General as gazetted by the Government Printer www.kenyalaw.org Kenya Energy Act The Energy (Electricity Tariffs) Regulations Gazette Notice 10557 of 2023 Legislation as at 11 August 2023 By Kenya Law and Laws.Africa. Share widely and freely. www.kenyalaw.org | [email protected] FRBR URI: /akn/ke/act/gn/2023/10557/eng@2023-08-11 There is no copyright on the legislative content of this document. This PDF copy is licensed under a Creative Commons Attribution NonCommercial ShareAlike 4.0 License (CC BY-NC- SA 4.0). This license enables reusers to distribute, remix, adapt, and build upon the material in any medium or format for noncommercial purposes only, and only so long as attribution is given to the creator. If you remix, adapt, or build upon the material, you must license the modified material under identical terms. CC BY-NC-SA includes the following elements: • BY: credit must be given to the creator. • NC: Only noncommercial uses of the work are permitted. • SA: Adaptations must be shared under the same terms. Share widely and freely. the creator. • NC: Only noncommercial uses of the work are permitted. • SA: Adaptations must be shared under the same terms. Share widely and freely. The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Contents 1. Citation ................................................................................................................................................................................................................ 1 2. Interpretations .................................................................................................................................................................................................. 1 3. Purpose of the Regulations ......................................................................................................................................................................... 2 4. Applications ....................................................................................................................................................................................................... 2 Part II – TARIFF APPROVAL AND REVIEW .................................................................................................................................................. 2 5. ................................................................................................................................................. 2 5. Tariff Application ...................................................................................................................................................................................... 2 6. Approval of Tariffs ................................................................................................................................................................................... 2 7. Retail Tariff Structure .............................................................................................................................................................................. 3 8. Regulatory Asset Base ............................................................................................................................................................................ 3 9. Allowances for Return ............................................................................................................................................................................ 4 10. ................................................................................................................................................ 4 10. Tariff Review ............................................................................................................................................................................................ 4 Part III – PUBLIC HEARING ON TARIFFS .................................................................................................................................................... 5 11. Public Hearing Preliminaries ............................................................................................................................................................. 5 12. Conducting Public Hearings .............................................................................................................................................................. 5 Part IV – REPORTING, COMPLIANCE AND ENFORCEMENT .................................................................................................................. 6 13. Reporting .................................................................................................................................................................................................. 6 14. ................................................................................................................................................ 6 14. Offences ..................................................................................................................................................................................................... 6 15. Appeal ........................................................................................................................................................................................................ 6 Part V – TRANSITIONAL PROVISIONS AND COMMENCEMENT .......................................................................................................... 6 16. Transitional Provisions ......................................................................................................................................................................... 6 17. Commencement ...................................................................................................................................................................................... 7 FIRST SCHEDULE [r. 5 (2)] ................................................................................................................................................................................ ...................................................................................................................................................... 7 SECOND SCHEDULE [r. 5 (3)] ........................................................................................................................................................................ 14 THIRD SCHEDULE [r. 6 (3)(a)] ....................................................................................................................................................................... 15 FOURTH SCHEDULE [r. 7 (2)] ........................................................................................................................................................................ 17 FIFTH SCHEDULE [r. 11 (3)] .......................................................................................................................................................................... 17 ................................................................................................................................................... 17 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya ENERGY ACT THE ENERGY (ELECTRICITY TARIFFS) REGULATIONS GAZETTE NOTICE 10557 OF 2023 Published in Kenya Gazette Vol. CXXV—No. 180 on 11 August 2023 Commenced on 11 August 2023 1. Citation These Regulations may be cited as the Energy (Electricity Tariffs) Regulations. 2. Interpretations In these Regulations, unless the context otherwise requires– any word or expression defined for the purposes of the Act shall have the same meaning ascribed thereto when used in these Regulations; "Act" means the Energy Act (Cap. 314); "Authority" means the Energy and Petroleum Regulatory Authority established by section 9 of the Act; "Cabinet Secretary" means the Cabinet Secretary for the time being responsible for energy; "Company" means a company within the meaning of the Companies Act (Cap. retary" means the Cabinet Secretary for the time being responsible for energy; "Company" means a company within the meaning of the Companies Act (Cap. 486); "Control formulae" means the formulae specified by the Authority for the computation of the applicable tariff during a tariff year; "Control period" means the period of the applicable tariff being three years in accordance with section 165 (7) of the Act; "Consumer" has the meaning assigned to it under the Act; "Cost allocation" means the process of correctly identifying, aggregating and assigning a single cost to more than one business activity, process or service in a manner that prevents cross subsidization; "Financial year" means the period of twelve months in respect of which a licensee prepares its accounts in accordance with the requirements of the Companies Act (Cap. means the period of twelve months in respect of which a licensee prepares its accounts in accordance with the requirements of the Companies Act (Cap. 486); "Grid" has the meaning assigned to under the Act; "Licensee" means a holder of any licence issued under the Act and one to whom these Regulations apply; "Regulatory accounts" means the prescribed system of accounts set out in the Energy (Electricity Regulatory Accounts) Regulations, 2022; "Regulatory Asset Base" means tangible and intangible assets used for the regulated activity, that are directly related to the regulated activity and are used in tariff calculation (except third-party-funded assets); "Tariff" has the meaning assigned to it under the Act; "Tariff applicant" or "Applicant" means the person who makes an application for tariff approval or review in accordance with these Regulations; "Tariff control" means the process of tariff constraint specified in these Regulations; "Tariff constraint" means the maximum allowable level for a tariff control measure; 1 the process of tariff constraint specified in these Regulations; "Tariff constraint" means the maximum allowable level for a tariff control measure; 1 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya "Tariff control framework" means the processes involved in the determination and periodic review of control formulae, the monitoring and enforcement of tariff constraints, and the operation of incentives; "Tariff control measure" means a financial indicator derived from the books and records of a licensee used to indicate compliance with a tariff constraint; and "Tariff year" means any one period or a series of periods, usually a financial year, as specified by the Authority. 3. Purpose of the Regulations The purpose of the Regulations is to promote a fair, transparent and data-driven methodology of determining tariffs for a sustainable electricity sector. 4. Applications These Regulations shall apply to persons engaged in— (a) purchase or sale of electrical energy as a generator, importer, exporter or retailer; or (b) provision of transmission, distribution and system operations services. Part II – TARIFF APPROVAL AND REVIEW 5. importer, exporter or retailer; or (b) provision of transmission, distribution and system operations services. Part II – TARIFF APPROVAL AND REVIEW 5. Tariff Application (1) A person shall not undertake sale or purchase of electrical energy or charge for provision of transmission, distribution network, system operation services unless under tariffs approved by the Authority. (2) A tariff approval application under subregulation (1) shall be made electronically in the form set out in the First Schedule with one hard copy submitted to the Authority. (3) The tariff application shall be accompanied by documents set out in the Second Schedule. (4) The Authority shall, within fifteen days of receipt of a tariff application, inform the applicant whether the application is complete. 6. Approval of Tariffs (1) The Authority shall before approving a tariff undertake a public hearing in accordance with Regulation 11. ion is complete. 6. Approval of Tariffs (1) The Authority shall before approving a tariff undertake a public hearing in accordance with Regulation 11. (2) In approving the tariffs, the Authority shall consider as applicable— (a) existing tariff policy or guidelines; (b) power procurement costs; (c) investment related costs; (d) network operation and maintenance costs; (e) fuel costs; (f) allowable system losses; (g) submissions during the public hearings including journal articles, studies or reports relied on in the submission; (h) rewards for outperformance and/or penalties for underperformance applicable; 2 g journal articles, studies or reports relied on in the submission; (h) rewards for outperformance and/or penalties for underperformance applicable; 2 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya (i) sector studies undertaken by the Authority such as cost of service studies; (j) pass through costs; (k) regulatory asset base; (l) allowable rate of return (m) depreciation; and (n) government funded initiatives targeting socio-economic development. (3) (a) In approving the tariffs under subregulation (2), the Authority shall allow only prudently incurred net costs for providing the services and variable costs supported by documentation, and a reasonable rate of return. The net costs and variable costs are as set out in the Third Schedule. (b) The tariff applicant shall be responsible for justifying that any costs or investments included in the formulation of tariffs are reasonable, and the Authority may challenge such costs or investments and where necessary reject them if it considers them to be unreasonable or imprudent. (4) (a) The Authority shall process the tariff application and publish its decision, no later than sixty days from the date of receipt of a complete tariff application. ity shall process the tariff application and publish its decision, no later than sixty days from the date of receipt of a complete tariff application. (b) The Authority may approve, reject or modify the required tariffs taking into account— (i) reasons and information submitted by the applicant to justify the tariffs; and (ii) comments from stakeholders and the public. (c) The Authority shall take into account, and shall endeavour to procure, good quality evidence to inform its decisions. (5) The tariff control period for an approved tariff shall be three years. (6) (a) The tariff control period in subregulation (5) shall not apply to sale of electrical energy or provision of transmission or distribution services for long term contracts approved by the Authority under section 163 of the Act. (b) Where a review of the tariff set out in a contract approved under section 163 of the Act is proposed during the term of the contract, parties shall require the Authority's approval before execution of the revised contract. In making its decision, the Authority shall consider the extent of substantive cost changes since the approval of the existing tariff. (7) A person who charges tariffs other than those approved by the Authority commits an offence. 7. changes since the approval of the existing tariff. (7) A person who charges tariffs other than those approved by the Authority commits an offence. 7. Retail Tariff Structure (1) Tariffs charged to consumers on the Grid shall indicate building blocks per kWh including generation cost, transmission cost, distribution cost and approved pass through costs. (2) The Authority shall publish pass through costs charged on consumers periodically as set out in the Fourth Schedule. (3) A licensee shall not earn a return on any pass-through costs. 8. Regulatory Asset Base (1) The Authority shall determine and account for a Regulatory Asset Base for licensees whose tariff application is under processing. 3 ory Asset Base (1) The Authority shall determine and account for a Regulatory Asset Base for licensees whose tariff application is under processing. 3 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya (2) The Regulatory Asset Base shall be based on a systematic method for rolling forward considering information reported in regulatory accounts. The accounts shall be from tariff year to tariff year that allows for— (a) additions in respect of all investment in non-current business assets incurred in good faith in whole or in part for the purpose of delivering services subject to tariff control; (b) deductions in respect of regulatory depreciation allowances; (c) deductions in respect of consumer capital contributions; (d) deductions in respect of asset disposals, such that the amount deducted represents the proceeds of disposal or the fair value of disposed assets if higher; and (e) adjustments necessary to effect incentives. 9. Allowances for Return (1) The Authority shall provide for a fair rate of return on a licensee’s Regulatory Asset Base when determining tariffs. (2) The rate of return shall be allowed based on the usage of assets that is consistent with cost allocation methods provided in the Energy (Electricity Regulatory Accounts) Regulations, 2022. sed on the usage of assets that is consistent with cost allocation methods provided in the Energy (Electricity Regulatory Accounts) Regulations, 2022. (3) The allowed rate of return shall be such as to attract debt and equity capital, maintain financial integrity of the applicant without transferring avoidable costs to the consumer. (4) The Authority shall assess the cost of debt that reflects- (a) The interest rate terms and other terms of prudently incurred financial obligations of the tariff applicant; and (b) Competitive forecasts of interest rates for new debt financing and refinancing. (5) The Authority shall assess the cost of equity with reference to- (a) the Capital Asset Pricing Model or any other justifiable model supported by other regulatory or academic authorities; (b) industry benchmarks; (c) evidence of relevant investor risks; and (d) the taxes payable on profits by the tariff applicant. 10. Tariff Review (1) A licensee shall make a tariff review application not later than forty-five days before the tariff's proposed effective date. (2) The Authority or licensee may initiate a tariff review within a tariff control period where there are substantive changes and deviations in assumptions or costs considered during the tariff processing and the actual incurred costs. riod where there are substantive changes and deviations in assumptions or costs considered during the tariff processing and the actual incurred costs. (3) A tariff review application shall be made in the form set out in the First Schedule and shall be determined in line with these Regulations. 4 (3) A tariff review application shall be made in the form set out in the First Schedule and shall be determined in line with these Regulations. 4 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya Part III – PUBLIC HEARING ON TARIFFS 11. Public Hearing Preliminaries (1) Where a tariff application is for a tariff to be charged on parties that were not part of the tariff development process, the Authority shall conduct a public hearing prior to making its decision. (2) The Authority shall give notice of a public hearing at least seven (7) days to the hearing the date. Copies of the tariff application shall be availed on the applicant’s and Authority websites. (3) The notice shall be in the form set out in the Fifth Schedule and shall at the cost of the applicant be published in any form of mass media or communication with reach to most of the affected parties including— (a) in at least one newspaper of wide circulation in Kenya; (b) in a newspaper having general circulation in the area where the proposed subject of the application is to be located; or through any other form of mass media or communication. eral circulation in the area where the proposed subject of the application is to be located; or through any other form of mass media or communication. Where the applicant has email addresses and telephone contacts of the affected parties, the applicant shall be required to send personalized communication in a format to be provided by the Authority. (4) The Authority may invite any person, body, institution or organization directly to provide expert knowledge/opinion on the submitted application as part of the public hearing. 12. Conducting Public Hearings (1) The public hearing shall be conducted in English and Swahili and presided by the Authority at the most publicly convenient venues identified so as to collect as much feedback as possible from the affected parties. (2) The tariff applicant shall present the submitted application during the public hearings with participants allowed to interrogate the application. (3) The Authority shall give a fair hearing to any stakeholder or to any person wishing to give views, comments or submission on the subject matter. (4) Any stakeholder or interested person wishing to make a formal presentation during the public hearing shall register their interest with the Authority at least 24 hours before the hearing. wishing to make a formal presentation during the public hearing shall register their interest with the Authority at least 24 hours before the hearing. The request shall be in writing and highlight the issue to be presented, justification of the need to present, name, address, and affiliation if any. (5) The Authority shall review the request for formal presentation and make a decision whether to admit the request or not. (6) The Authority shall provide a reasonable time for the applicant to present their tariff, a justification for the requested tariff and respond to raised queries. (7) The Authority shall provide a summary of the consultations had at the end of each public hearing, outline the outcomes and maintain a record of the discussion. (8) During the public hearing period, the Authority may accept written references such as journals, studies or reports from members of the public for consideration in arriving at the final decision. 5 y may accept written references such as journals, studies or reports from members of the public for consideration in arriving at the final decision. 5 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya Part IV – REPORTING, COMPLIANCE AND ENFORCEMENT 13. Reporting (1) A licensee shall submit to the Authority, within six months after the end of each tariff year, a tariff control compliance statement demonstrating compliance with the tariff control formulae. (2) The tariff control compliance statement shall disclose— (a) a computation of the tariff constraints; (b) a statement of the corresponding tariff control measures; and (c) a statement of any variances between (a) and (b). (3) A licensee shall incorporate the compliance statement in the regulatory accounts which shall be subject to audit. 14. Offences (1) A person who– (a) charges tariffs that are not approved by the Authority commits an offence and shall, upon conviction, be liable to a fine of not less than hundred thousand shillings in accordance with section 221 of the Act or to six months imprisonment, or to both fine and imprisonment. of not less than hundred thousand shillings in accordance with section 221 of the Act or to six months imprisonment, or to both fine and imprisonment. (b) contravenes any of their licence condition related to the application, charging, approval or review of tariffs commits an offence and shall be liable on conviction to a fine of not less than one million shillings or to a term of imprisonment of not less than one year, or to both, in accordance with section (1)(a) of the Act. (c) makes a false statement or a statement one has reason to believe is untrue to the Authority or to an agent or an officer acting on behalf of the Authority commits an offence and is on conviction liable to a fine not exceeding ten million shillings or imprisonment for a term not exceeding five years or to both, in accordance with section 210 of the Act. (d) fails to submit a tariff control compliance statement within the due date shall be liable to a fine of ten thousand shillings for every day the non-compliance persists. (e) submits a tariff control compliance statement that demonstrates failure to comply with the tariff control formulae shall be liable to a fine of twenty thousand shillings for every incidence. ement that demonstrates failure to comply with the tariff control formulae shall be liable to a fine of twenty thousand shillings for every incidence. (2) The fines or penalties in subregulation (1) are without prejudice to the Authority’s right to suspend or revoke the licensee’s licence or certificate in accordance with the Act. (3) Any fines or penalties which are not paid shall be a civil debt recoverable summarily. 15. Appeal Any person aggrieved by a decision or order of the Authority may appeal to the Tribunal in accordance with section 24 of the Act. Part V – TRANSITIONAL PROVISIONS AND COMMENCEMENT 16. Transitional Provisions The tariffs existing at the commencement of these Regulations shall continue in place until new tariffs are gazetted under these Regulations. 6 isions The tariffs existing at the commencement of these Regulations shall continue in place until new tariffs are gazetted under these Regulations. 6 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya 17. Commencement These regulations shall come into effect immediately upon gazettement by the Cabinet Secretary. FIRST SCHEDULE [r. 5 (2)] TARIFF APPROVAL APPLICATION FORM Type of Tariff applied for (tick relevant option): Type of Tariff applied for (tick relevant option): Generation of electricity for own use☐ Generation and sale of electricity☐ Transmission of electricity☐ Bulk supply of electricity☐ System operator☐ D istribution of electricity☐ Retail supply or sale of electricity☐ Export of electricity☐ Import of electricity☐ Particulars of intended application: Name of Applicant: ........................................ Physical address: ........................................ Postal address: ......................................... Telephone: .............................................. Mobile phone: ........................................... Fax: ..................................................... E-mail address: ........................................ PIN: ................................................... VAT Registration: ........................................ .................................. PIN: ................................................... VAT Registration: ........................................ Name and details of contact person: Name: .................................................... Physical address: ........................................ Postal address: .......................................... Telephone: ................................................ Mobile phone: ............................................. E-mail address: .......................................... Website address: ........................................ 7 ............................... E-mail address: .......................................... Website address: ........................................ 7 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya Position Held ........................................... Legal status of applicant: Indicate legal status of applicant (tick appropriately): Sole proprietorship Partnership Public Limited Liability Company Private Limited Liability Company Co-operative Union Society Other (please specify) (Attach certificate of registration, certification of incorporation, memorandum and articles of association where applicable or other documentary evidence of legal status) Particulars of Directors Name Address Nationality Country of Usual Residence . . . . Financial Status of Applicant: Share capital of the applicant (fully paid): ..................................................... ……................................................... ..................................................... Loans: ..................................................... ……................................................... ..................................................... .......................................... ……................................................... ..................................................... (Provide certified audited financial statements and accounts for the last three (3) years, if available, prior to application) Name and address of bankers Bankers in Kenya: 8 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya Name Address Email Address Telephone Fax Contact Person . . . . Bankers outside Kenya: Name Address Email Address Telephone Fax Contact Person . . . . Other referees for the applicant’s financial status No. Name and Address Contact Person . . . Source of funding: Source of funding for feasibility study (specify the source and amount expected): ..................................................... ...................................................... ..................................................... Sources of funding for the proposed project: 9 ................................................. ..................................................... Sources of funding for the proposed project: 9 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya Share capital contribution (specify foreign or local): ..................................................... ……................................................... ..................................................... Loan capital (specify source and provide evidence): ..................................................... ……................................................... ..................................................... Others(specify): ..................................................... ……................................................... ..................................................... Main current business activity of applicant: ..................................................... ……................................................... ..................................................... Technical capacity and experience. Technical and industrial competence of applicant. Provide detailed statements of applicant’s technical and industrial competence and experience to undertake the proposed project ..................................................... applicant’s technical and industrial competence and experience to undertake the proposed project ..................................................... ……................................................... ..................................................... Describe technical and industrial support from external sources: ..................................................... ……................................................... ..................................................... Description of proposed project. Provide detailed description of intended project (attach detailed feasibility study) ..................................................... ……................................................... ..................................................... Project site or utilities. (attach relevant map and drawings and state whether there are access roads required): ..................................................... ……................................................... 10 ether there are access roads required): ..................................................... ……................................................... 10 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya ..................................................... Capacity of proposed project. (state amount of power to be generated, transmitted, distributed or supplied): ..................................................... ……................................................... ..................................................... Time plan for implementation of the project: ..................................................... ……................................................... ..................................................... Land use at the project site: …..................................................... ……................................................... ..................................................... Access roads, generation plant, transmission and distribution required for the project (attach map): ..................................................... ……................................................... ..................................................... Contact or consultants with local authorities: (attach relevant documents): ..................................................... .................... Contact or consultants with local authorities: (attach relevant documents): ..................................................... ……................................................... ..................................................... State if there is need to access public and /or private land: …..................................................... ……................................................... .....................................................… Specified consents or licenses required from other public authorities to undertake project and their status (attach relevant documents): Consentrequired and from whom Description of activity Legal provisions Status . . . 11 undertake project and their status (attach relevant documents): Consentrequired and from whom Description of activity Legal provisions Status . . . 11 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya . Impact of the projects. Impact on socio-economics …............................................... ........................................................................... Impact on cultural heritage …............................................. ……....................................................................... ........................................................................… Impact on environment …................................................... .......... …….............................................................. .......................................................................... Impact on natural resources ….............................................. ................ ……........................................................ .......................................................................... Impact on wildlife …...................................................... . ……..................................................................... .......................................................................... . . ……..................................................................... .......................................................................... Response to comments by stakeholders (attach an evaluation report and a response to comments): …..................................................... …….................................................... ...................................................... Commercial aspects of the project. State intended market for generated power:(tick relevant option) Domestic Export Own distribution Sales to national grid State the areas to which the power shall be supplied: …..................................................... …….................................................... ......................................................... Power Purchase Agreements or Power Sales Agreements where applicable(attach copy of agreements) …............................................................. ............................................................... .............................................................. Tariff charges and methodology 12 ..................................................... .............................................................. Tariff charges and methodology 12 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya Provide detailed proposed terms of supply, structure of tariff calculation and methodology: ……........................................................... ............................................................ ............................................................. Provide detailed statements of total annual revenue requirements projected for first five years: ….......................................................... ............................................................ ........................................................... Indicate the planned investments in the first five years: …..................................................... ……. .......................................................... ............................................................ Indicate the required rate of return: …..................................................... ……. ........................................................ .......................................................... .............................. ……. ........................................................ .......................................................... Declaration by the applicant: I/We declare that the proposed project is not unlawful and that the details stated above are, to the best of my/our knowledge, true and correct. Dated this ............. day of ............. 20 ......... Authorized signature(s) and seal of the applicant(s) Signature ............. Signature .............. Name .............. Name ...................... Witnesses to above signatures: Name Position Signature . . . . FOR OFFICIAL USE ONLY Date of submission of application: ................................ 13 sses to above signatures: Name Position Signature . . . . FOR OFFICIAL USE ONLY Date of submission of application: ................................ 13 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya Results of verification for completeness: .......................... Date and newspaper in which application was advertised: ............ Results of public hearing: ........................................ Decision of Authority: ............................................. Recommendations by Authority: ........................................ Date of Issue: ........................................................ Date of Expiry: ........................................................ Other relevant information: ............................................. SECOND SCHEDULE [r. 5 (3)] DOCUMENTATION TO ACCOMPANY TARIFF APPLICATIONS New Applications The tariff application shall be accompanied by the following supporting documents: Certified Copy of Certificate of Registration or Certificate of Incorporation and Memorandum and Articles of Association in case of a company (whichever is applicable); Valid Certified Form CR12 Valid tax compliance certificate from the Kenya Revenue Authority; PIN certificate. of a company (whichever is applicable); Valid Certified Form CR12 Valid tax compliance certificate from the Kenya Revenue Authority; PIN certificate. Proof of Main Office Occupancy Audited financial statements and accounts for the last (3)three years prior to application Tariff Model Detailed Feasibility Study Environmental Impact Assessment Study from the National Environmental Management Authority Relevant approvals from Local Authorities Proof of Land ownership of project site Maps and drawings of project site Expression of Interest approval issued by the Cabinet Secretary (where applicable) Power Purchase Agreements or Power Sales Agreements (where applicable) Evaluation report and a response to comments by stakeholders Tariff Review The application for tariff extension/review approval shall be accompanied by the following supporting documents: Tariff model Valid Certified Form CR12 Valid Tax Compliance Certificate from the Kenya Revenue Authority; Audited Financial statements and accounts last (3) three years prior to application 14 id Tax Compliance Certificate from the Kenya Revenue Authority; Audited Financial statements and accounts last (3) three years prior to application 14 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya THIRD SCHEDULE [r. 6 (3)(a)] EXPLANATORY SCHEDULE FOR NET COSTS AND VARIABLE COSTS Regulation Explanation 4 (c) Where it considers it appropriate, the Authority should seek independent verification or undertake analysis to ensure the evidence base for its decisions is of appropriate quality. ate, the Authority should seek independent verification or undertake analysis to ensure the evidence base for its decisions is of appropriate quality. Evidence may include: Evidence on historical and forecast costs, investment needs, outputs, risks, user demand and user preferencesEvidence on the performance and costs of comparable licensees within and outside Kenya The net costs of providing the services to which tariffs relate will include: 6 (3) (a) The costs of procuring electric energy and standby electricity generating capacity, Other expenditure necessary to support the relevant services, including the costs of public service obligations, including but not limited to those required to meet environmental and social objectives, where these obligations are imposed by empowered authorities in accordance with relevant legislation, The costs of maintaining, renewing and replacing business assets, generally accounted for as depreciation, Allowances for profits to provide a reasonable expectation for a fair rate of return on investment in business assets, represented by a Regulatory Asset Base, that is consistent with attracting debt and equity capital and maintaining the finance ability of the licensee’s investment programmes. ry Asset Base, that is consistent with attracting debt and equity capital and maintaining the finance ability of the licensee’s investment programmes. Less any other income arising from or otherwise reasonably attributable to the activities and assets of the licensee 8(2)(a) Non-current business assets will generallyinclude tangible fixed assets and software licences but exclude financial investments, 8 (2) (b) purchased goodwill and other intangible assets unless the Authority otherwise agrees.The method should ensure that amounts deducted correspond to, or are computed on a consistent basis with, amounts included in the determinations of the control formulae for the relevant period. 8 (2) (c) Consumer capital contributions would include capital grants and any capital component of connection charges. 15 lae for the relevant period. 8 (2) (c) Consumer capital contributions would include capital grants and any capital component of connection charges. 15 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya 10 (2) To avoid undue asymmetrical risk for licensees/consumers. 13 Variables in a tariff control formulae may include: A base year value for the respective tariff constraint Adjustments for inflation Pass-through adjustments In respect of outputs, incentive adjustments for: variances in service levels variances in asset performance achievement of milestones in the delivery of outputs, investment or other objectives In respect of tariff control compliance (for other than fuel cost tariffs) variances disclosed in a tariff control compliance statement compensation for financing costs or benefits associated with under-recovery or over- recovery In respect of fuel cost tariffs: releases of any accumulated surplus from a regulatory fuel cost provision in the event that a provision exceeds thresholds determined by the Authority after due consultation in accordance with Regulation 11 any accumulated deficit on a regulatory fuel cost provision. Any other variables that the Authority considers necessary or desirable to further its objectives. 16 ted deficit on a regulatory fuel cost provision. Any other variables that the Authority considers necessary or desirable to further its objectives. 16 The Energy (Electricity Tariffs) Regulations (Gazette Notice 10557 of 2023) Kenya FOURTH SCHEDULE [r. 7 (2)] SCHEDULE OF PERIODIC PUBLICATION FOR PASS THROUGH COSTS No. Pass Through Frequency of Publication 1. Taxes and Levies As imposed by from time to time government 2. Inflation (INFA) Adjustment Biannual 3. Water Management Resource Authority (WRMA) Levy Monthly 4. Fuel Energy Cost (FEC) Monthly 5. Foreign Exchange Rate Fluctuation Adjustment (FERFA) Monthly FIFTH SCHEDULE [r. 11 (3)] NOTICE OF PUBLIC HEARINGS Take notice that the Energy and Petroleum Regulatory Authority shall, on the .... day of .........., 20… hold a public hearing regarding .......... (nature of the application) at ........... (venue) starting at ........ (time). Government agencies, electricity sector stakeholders and persons affected by the application are hereby invited to attend the hearing. All stakeholders and affected persons wishing to make presentations may register with the Secretary to the Authority not later than the ....... day of ............ 20 ......... Signed: .................. For and on behalf of the Energy and Petroleum Regulatory Authority. Dated this .......... day of .......... .. 20 ......... Signed: .................. For and on behalf of the Energy and Petroleum Regulatory Authority. Dated this .......... day of .......... 20 ......... 17
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