Prepaid Electricity Billing And The Financial Performance Of Kenya Power And Lighting Company

ABSTRACT

Revenue collection has been a cause of great distress to Kenya Power under the postpaid system where meters are read, captured, and bills produced. Due to inefficiencies in revenue collection as a result of the postpaid systems, most electricity distributing companies including Kenya Power are forced to establish the debt collection departments. The main objective of this study was to determine the effects of prepaid electricity billing on financial performance of Kenya Power. The study objectives were to assess the effects of collection costs on financial performance of Kenya Power, to establish the effects of bad debt on financial performance of Kenya Power, to find out the effects of revenue collection period on financial performance of Kenya Power and to determine the effect of billing accuracy on financial performance of Kenya Power. The study was informed by The Technology Acceptance Model, TAM and Socio-technical model. The study employed cross sectional research design. The target population consisted of Kenya Power Company Coast Branches of Ukunda, Voi, Kilifi and Mombasa. Study collected data from annual report, financial report and other relevant documents on a monthly basis from January 2013 to December, 2015.The observations were 4 branches multiplied by 36 months (3 years) giving 144 observations. Census technique were used to get information from all the branches in Coast region. The data collection instrument used in this study was content/document analysis guide. Descriptive statistics such as mean, median, maximum, minimum, standard deviation and inferential statistics such as regression and person correlation were used to analyze data. The study was modeled along an ordinary least squares regression method. The study findings indicate that collection costs and revenue collection period have a negative and significant influence on profitability of Kenya Power at the Coast region. Billing accuracy had significant influence on profitability of Kenya Power at the Coast region. However, bad debts had no significant effect on profitability of Kenya power. Thus, there is need for the company to double its efforts in debt collection through the relevant department. In order to achieve this, Kenya Power should increase the coverage of the prepaid meters at the coast region and if possible across the country. Findings there is need to ensure billing accuracy in order to positively influence financial performance of the company.