The Department of Energy will accelerate the review of rules on cheap overnight energy costs ahead of the proposed opening of electricity transmission and distribution to the private sector early next year.
Cabinet Minister for Energy, Opio Wandaye, said the government is racing against time to ease conditions that have hampered the absorption of night-time power for large industries at reduced costs.
Manufacturers have been putting pressure on the state To reduce the strict limit that requires commercial and industrial users to exceed their average monthly energy consumption over a six-month period to qualify for off-peak tariffs.
“We are looking to improve time-of-use (ToU) tariff frameworks to ensure increased electricity consumption during off-peak hours and ensure maximum benefits are passed on to our customers,” Mr Wandai said. Daily chores.
“I will be holding a stakeholder meeting with the Kenya Manufacturers Association to see how I can best support. My office will have a cross-sectoral approach to ensure improved energy supply to our customers,” the CS said.
The Energy and Petroleum Regulatory Authority (Epra) said in June that officials were working on a new structure that would mitigate the expected impact on state-run Kenya Power’s revenues, estimated at more than Sh20 billion annually.
The new structure will replace the current structure, which requires small commercial and industrial consumers to meet a monthly consumption limit tracked for six months to qualify for the discounted rates known as the ToU tariff.
The duration-of-use tariff, introduced in 2018, provides large consumers with a 50 percent discount for using electricity outside peak hours. The tariff, which sees consumers pay up to Sh6.06 per unit of electricity based on consumption, is aimed at encouraging productive use of energy and increasing industrialization.
Businesses and industries enjoy a duration-of-use tariff during off-peak hours that occur between 10pm and 6am, a period when the country is forced to curtail electricity to ensure a stable grid.
Electricity curtailment refers to any action aimed at reducing the amount of energy generated within a system to ensure there is a balance between demand and supply. For example, small commercial consumers paid an estimated Sh9.70 per kilowatt hour under the off-peak tariff, compared to Sh19.40 per unit under the normal tariff in September.
However, manufacturers have argued that the rule on energy absorption made it difficult for some plants to take advantage of cheap overnight energy charges, partly due to an inability to meet the average limit of consumed units required over a six-month period. As a result, manufacturers have petitioned President William Ruto to remove the consumption threshold that large commercial and industrial companies must meet to enjoy lower tariffs outside peak hours.
The Kenya Manufacturers Association described this threshold as a “moving target” where companies must increase night-time energy consumption by six percent over six months to continue to benefit from the reduced tariff.
The industry lobby group said its data showed that about 2,200 businesses on average, representing about 25 percent of potential beneficiaries, were eligible for a 50 percent discount on electricity bills for night-time production. This helped them save about Sh148 million on electricity bills.
“Given the current thresholds, only a few companies can increase their consumption by six percent in six months, so only a small number of users benefit from this incentive. This requirement is discouraging,” KAM said via email on Monday. Need to restructure minimum details so that more users benefit. This will also increase off-peak sales for the utility (Kenya Power).”