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This research project aimed to establish the effect of inflation on the prices of materials procured by Kenya Power, to correlate the prices of materials as procured by Kenya Power against the market prices over the period running from 2004 through to 2012, to correlate the operation costs over the period beginning 2004 through to 2012 per Megawatt distributed to the customers and to determine the effect of vandalism on the cost of distribution of electricity. The researcher adopted descriptive research design. Through random stratified sampling method the researcher selected 100 respondents out of total population of 300. Data was collected through the administering of questionnaire to the respondents. Secondary data was also collected from Kenya National Bureau of Statistics, Kenya Power and suppliers of electricity distribution materials. Quantitative and qualitative techniques of data analysis were used to collect Data and the findings were presented through charts, tables and graphs for simple understanding of the findings. From the findings it was revealed that inflation, operating costs, market prices and vandalism affected the service delivery and the cost of electricity in Kenya. The study recommended that Kenya Power adopts global sourcing for its materials and develop policies to eliminate monopoly of electricity distribution in Kenya