Energy Regulatory Commission

From Kenya - Margiti! The Market Place

Energy Regulatory Commission(ERC) is established under the Energy Act, 2006. Following the operationalization of the Energy Act, 2006, with effect from July 7 2007, the Electricity Regulatory Board (ERB) became Energy Regulatory Commission (ERC) with the following objectives and Functions:-

  • Regulate the electrical energy, petroleum and related products, renewable energy and other forms of energy.
  • Protect the interests of consumer, investor and other stakeholder interests.
  • Maintain a list of accredited energy auditors as may be prescribed;
  • Monitor, ensure implementation of, and the observance of the principles of fair competition in the energy sector, in coordination with other statutory authorities;
  • Provide such information and statistics to the Minister as he may from time to time require; and
  • Collect and maintain energy data;
  • Prepare indicative national energy plan;
  • Perform any other function that is incidental or consequential to its functions under the Energy Act or any other written law.

The aspiration of the Sessional Paper No. 4, 2004 on Energy was to lay the policy framework upon which cost-effective, affordable, adequate and quality energy services will be made available to the domestic economy on a sustainable basis over a period 2004-2023. The agenda for action in the Sessional Paper included enactment of a new and robust Energy Act to, among other things; create a common energy sector regulator, the Energy Regulatory Commission.

The Energy Act, No. 12 of 2006 consolidated the Electric Power Act No. 11 of 1997 and the Petroleum Act Cap. 116. The Act, among other things provided for the establishment, powers and functions of the Energy Regulatory Commission as a successor to ERB.

The Kenya Electricity Grid Code is the primary technical document of the electricity supply industry (ESI), collating the majority of the technical regulations covering the generation, transmission, distribution and supply of electrical energy.

Essentially the Grid Code is a consolidation of existing standards and practices in the Kenyan ESI and is intended to provide a transparent regulatory framework, in line with the principle of non-discriminatory access to the transmission and distribution systems, and is designed to provide technical specifications and procedures that complement the Act.


The Electric Power (Complaints and Dispute Resolution) Rules, 2006, published as Legal Notice No.106, Kenya Gazette Supplement No.56 (Legislative Supplement No. 31) on August 4, 2006 provides the means by which the Commission can help resolve complaints and disputes between a licensee and its customers where any party remains disatisfied after exhausting the licensee's complaints resolution procedures.

The Electric Power (Electrical Installation Work) Rules, 2006, published as Legal Notice No.115, Kenya Gazette Supplement No. 60 (Legislative Supplement No. 34) on September 6, 2006 sets out the requirements for the licensing of electricians and electrical contractors. The licensing is administered and approved by ERC’s Electricians’ and Electrical Contractors’ Licensing Panel set up in 2006. The Draft Energy (Electricity Licensing) Regulations, 2010 sets out requirements to be fulfilled by any person desiring a licence or permit authorising him to carry out any undertaking in the generation, transmission, distribution or supply of electrical energy in Kenya.

The Draft Energy(Electrical Installation Work)Rules 2011 published for public/stakeholder comments and is intended to replace, ‘’The Electric Power(Electrical Installation work) Rules, 2006”; sets out the requirements for the licensing of electricians and electrical contractors, and regulation of Electrical installation works in Kenya.

Environment Health and Safety Regulation in the Energy Sector

The Energy Act mandates the Energy Regulatory Commission to in consultation with statutory bodies, “…formulate, enforce and review environmental standards…” in the sector. The main regulatory instruments for Environment Health and Safety regulation used by ERC in addition to the Energy Act No. 12 of 2006 are the Environmental Management and Coordination Act No. 8 of 1999, and the Occupational Safety and Health Act No. 15 of 2007. Other instruments include the Environment Health and Safety Policy of the Electricity Sub-sector and international guidelines such as those of the World Bank/IFC.

Environmental Regulations

The Environmental Management and Coordination Act No. 8 of 1999 is an act of Parliament to provide for the establishment of an appropriate legal and institutional framework for the management of the environmental and for connected purposes. Several regulations have been developed under the Environmental Management and Coordination Act No. 8 of 1999 by the National Environmental Management Authority (NEMA) in consultation with stakeholders. The regulations are listed below.

The Environmental (Impact Assessment and Audit) Regulations, 2003 Legal Notice No. 101 These regulations provide the framework for the Environmental Impact Assessment (EIA) and Environmental Audit (EA) of Projects. Projects that require EIA or EA are given in the Second Schedule of the Environmental Management and Coordination Act No. 8 of 1999. The regulations also require Strategic Environmental Assessments (SEA) to be done for programmes, policies, and plans.


The Environmental Management and Coordination (Water Quality) Regulations, 2006, Legal Notice No. 120. The regulations sets quality standards for water used for drinking, industrial, agricultural, recreational, fisheries and wildlife and other purposes. It also sets effluent standards and provides a framework for the issuance of effluent discharge licences.


The Environmental Management and Coordination (Waste Management) Regulations, 2006, Legal Notice No. 121 The regulations sets the requirements for the handling, transportation, disposal of domestic, industrial, hazardous, toxic, biomedical, radioactive and pesticide wastes. It also requires waste generators to engage cleaner production methods in order to reduce waste generation. Activities such as waste transportation, operation of waste treatment/disposal sites, exportation or transit of wastes are to be licenced under these regulations.


The Environmental Management and Coordination (Conservation of Biological Diversity and Resources, Access to Genetic Resources and Benefit Sharing) Regulations, 2006, Legal Notice No. 160 The regulations seek to control the exchange of genetic resources, access to genetic resources, human genetic resources, and related research activities for educational purposes. Activities that may have an impact on ecosystems, exotic species or lead to unsustainable use of natural resources is required under the regulations have an Environmental Impact Assessment Licence.


The Environmental Management and Coordination (Wetlands, River Banks, Lake Shores and Sea Shore Management) Regulations, 2009, Legal Notice No. 160 The regulations seek to ensure the protection of wetlands, catchment areas, river banks, lake shores, and sea shores. The regulations require project proponents with projects likely to affect wetlands, river banks, lake shores or sea shore to conduct Environmental Impact Assessment.


Occupational Safety and Health Regulations

The Occupational Safety and Health Act No. 15 of 2007 is an Act of Parliament to provide for the safety, health and welfare of workers and all persons lawfully present at workplaces, to provide for the establishment of the National Council for Occupational Safety and Health and for connected purposes. The rules prepared by the Directorate of Occupational Health and Safety Services under the repealed Factories and Other Places Act Cap 514 are given below. The rules are still applicable courtesy a transitional provision in the Occupational Safety and Health Act.


The Factories (Electric Power) (Special) Rules, 1979, Legal Notice No. 340.

These rules seek to ensure safety in electrical installations and apply to generation, transformation, switching, controlling, regulating, distribution and use of electrical energy.


The Factories and Other Places of Work (Medical Examination) Rules, 2004, Legal Notice No. 24.

The rules require that workers working in occupations that may affect their health to undergo medical examination prior and during employment. The list of occupations requiring medical examination is given in the schedule to the rules. Responsibility for implementation lies with the employer.


The Factories and Other Places of Work (Safety and Health Committees) Rules, 2004, Legal Notice No. 31.

The rules require workplaces with more than twenty employees to set up a safety and health committee. The committees are to promote safety and health in the workplace. The employer is responsible for implementing the regulations.


The Factories and Other Places of Work (Noise Prevention and Control) Rules, 2005, Legal Notice No. 25.

The rules set limits for permissible noise levels in the workplace. It also requires employers to ensure a safe environment in workplaces with noise levels above recommended limits.


The Factories and Other Places of Work (Fire Risk Reduction) Rules, 2007, Legal Notice No. 59

The rules requires employers who make use of hazardous substances in their workplace to ensure levels of the said substance are measured annually, and that measures are taken to control air borne hazardous substances.


The Factories and Other Places of Work (Hazardous Substances) Rules, 2007, Legal Notice No. 60

The rules require that owners or occupiers of workplaces to among others ensure that means of extinguishing fires are available, have a safety fire policy and take measures to prevent, control and reduce the risk of fires in the workplace. Suitable means of escape and warning should be provided.


Electricity Supply Industry in Kenya

The Kenya Electricity Supply Industry (ESI) is one of the sub-sectors in the energy sector over which the Ministry of Energy (MoE) exercises oversight on behalf of the Government of Kenya (GoK).

The energy sector has been undergoing restructuring and reforms since the mid-90s, which culminated in the enactment of the Energy Act, No 12 of 2006 (the Act).

Under the Act, MoE is responsible for formulation and articulation of policies through which it provides an enabling environment to all operators and other stakeholders in the energy sector.

The Energy Regulatory Commission (ERC) was established in 2007 under the Act as an autonomous, independent energy sector regulator with powers to, inter alia, formulate licensing procedures, issue licenses and permits, make recommendations for the necessary regulations to be issued by the Minister, formulate, enforce and review environmental, health, safety and quality codes and standards, set, review and adjust electric power tariffs, approve power purchase and network service contracts, examine and approve meters, investigate complaints between parties, accredit energy auditors, ensure competition, collect and maintain energy data, protect stakeholders interests, and prepare an indicative national energy plan.

Principal operators in the ESI are the Kenya Electricity Generating Company (KenGen) which accounts for close to 80% of generation, the balance being provided by five (5) Independent Power Producers (IPPs), namely Iberafrica Power (EA) Ltd, Tsavo Power Company Ltd, OrPower4 Inc and Mumias Sugar Company Ltd. A sixth IPP, Rabai Power Ltd is set to commence operations in October 2009.

The Kenya Power and Lighting Company (KPLC) is responsible for transmission, distribution and retail supply of electrical energy to end users. KPLC purchases power in bulk from KenGen and the IPPs through bilateral contracts or Power Purchase Agreements (PPAs) approved by ERC

Other operators in the ESI include James Finlay, Sotik Tea Company, Sotik Highlands Tea Estate, Oserian Development Company, Pan African Paper Mills, Unilever Tea Kenya Ltd and Tiomin, who are licensed to generate electrical energy for own use.

Other players in the ESI are: The Rural Electrification Authority (REA), mandated to, inter alia, develop and update the rural electrification master plan, implement the rural electrification programme and promote the use of renewable energy sources. The Geothermal Development Company (GDC) formed in 2009 for the purpose of exploiting the hugely untapped geothermal energy potential, and The Kenya Electricity Transmission Company (Ketraco), also formed in 2009 to develop new transmission lines.

Functions of the Electricity Department

The Electricity Department is responsible for the technical regulation of the electric power sub-sector. Its functions are:

  1. Review of and advise on government policy on the electricity sub-sector;
  2. Preparation of strategic and operational plans;
  3. Licensing of the generation, transmission, distribution and supply of electricity;
  4. Reviewing of power purchase agreements and network service contracts;
  5. Development and enforcement of regulations, standards and licence conditions;
  6. Collection and maintenance of information relating to the technical regulation of the electricity sub-sector;
  7. Generation and transmission expansion planning;
  8. Regulating the use of electrical energy including metering and meter certification;
  9. Licensing of electricians and registration of electrical contractors, and
  10. Investigation and determination of complaints and disputes.

The Electricity Department comprises two sections, namely Power Systems and Consumer Affairs

1. The Power Systems Section is responsible for:

  • Reviewing, issuing, renewing, modifying, suspending or revoking licences and permits for the generation, transmission, distribution and supply of electricity;
  • Reviewing of power purchase agreements and network service contracts;
  • Monitoring the technical performance of electric power generators, transmitters, distributors and suppliers;
  • Development and enforcement of regulations, standards and licence conditions;
  • Collection and maintenance of information relating to technical regulation for the electricity supply industry, and
  • Generation and transmission expansion planning.

2. The Consumer Affairs Section is responsible for:

  • Developing regulations and standards for the supply and use of electrical energy including customer charters;
  • Regulation of the supply and use of electrical energy including metering and meter certification in coordination with other statutory bodies and agencies;
  • Regulation of electrical installation work including the licensing of electricians and registration of electrical contractors as well as monitoring their performance;
  • Providing technical input in the review of retail electricity tariffs, and
  • Investigation and determination of complaints and disputes.

Energy Sub-sector


Petroleum

Petroleum fuels constitute the main source of commercial energy in Kenya. Kenya is a net importer of petroleum products and has a refinery owned and managed by the Kenya Petroleum Refineries Ltd (KPRL), an 800 km cross country oil pipeline from Mombasa to Nairobi and Western Kenya with terminals in Nairobi, Nakuru, Eldoret and Kisumu, run by the Kenya Pipeline Company (KPC). The sector also boasts of over 30 oil importing and marketing companies comprising of five major companies namely Shell, Total, Kenol/Kobil, Oil Libya, Chevron, and other emerging oil companies which include the Government owned National Oil Corporation of Kenya (NOCK).


The sector, which was liberalized in 1994, has since seen a lot of growth and improvements in quality and level of service. However, without an appropriate regulatory environment being in place at the time of liberalization (the existing legislation at the time was the Petroleum Act Cap 116 of 1948 with latest revision of 1972), several challenges face the sector which include proliferation of substandard petroleum dispensing and storage sites which pose environment health and safety risks; diversion of petroleum products destined for export into the local market by unscrupulous business people to evade tax and a dominance of the market by a few companies among others. The Government noted these challenges in its energy policy contained in Session Paper No. 4 of 2004 on Energy and recommended review of the Petroleum Act Cap 116 and other energy sector statutes and the introduction of a new energy sector legislation to cover petroleum, electricity and renewable energy. It also recommended the formation of a single energy sector regulator to regulate electricity, downstream petroleum, renewable energy and other forms of energy.

In 2006, the Energy Act No. 12 of 2006 was enacted. This led to the transformation of the then Electricity Regulatory Board to the Energy Regulatory Commission (ERC) to also regulate petroleum and renewable energy sectors in addition to electricity. The Act states in Section 5(a) (ii) that the objects and functions of ERC include regulating the importation, exportation, transportation, refining, storage and sale of petroleum and petroleum products. Therefore one of the functions of the ERC is licensing of petroleum import, export, transport, storage, refining and sale. Construction Permits are also to be issued by ERC for all petroleum related facilities in order to check proliferation of substandard sites. All petroleum operators are required to comply with provisions for Environment Health and Safety. Petroleum products should also meet the relevant Kenya Standards.

Section 102 empowers the Minister to make regulations upon recommendation by the Commission on petroleum related activities including importation, exportation, and landing, open tender systems for importation, minimum operational stocks, and determination of retail prices for petroleum products among others. Regulations which were developed under the repealed Petroleum Act Cap 116 are deemed to be in force until repealed or revoked under the provisions of the Energy Act No. 12 of 2006.


Functions of the Petroleum Department:

  • Review of government policy on petroleum;
  • Governing the petroleum sector with focus on licensing, issuing of construction permits, developing standards for bulk petroleum transportation and petroleum costs and prices monitoring;
  • Take the lead in the formulation, review and enforcement of rules, regulations and codes for the petroleum sector;
  • Identifying gaps in EHS and developing interventions to address the gaps to ensure that EHS clearly understands standards and rules that it is expected to regulate. This will include the review and enhancement of existing standards.

We also get most of our energy from non-renewable energy sources, which include the following:

Oil Natural gas Coal Nuclear (Uranium)

Energy Sub-sector


Renewable Energy Sources

Renewable energy sources can be replenished in a short period of time. The five renewable sources used most often are:

  1. Biomass - including wood and wood waste, municipal solid waste, landfill and biogas, ethanol, and biodiesel
  2. Water (hydropower)
  3. Geothermal
  4. Wind
  5. Solar

Functions of the Renewable Energy Department


Responsible for:

  • Monitoring and evaluation section in this department will focus on assisting the Ministry of Energy to develop and monitor regulations and standards for all forms of renewable energy. This will be done in consultation with statutory bodies such as the Kenya Bureau of Standards and Kenya Forest Services;
  • Preparing an indicative energy plan for renewable using available energy data and carrying out relevant research activities in this sector;
  • Promoting energy efficiency and conservation across the renewable sector as well as the petroleum and electricity sector.




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