Regulator seeks to lower cost of production with tariff discounts on off-peak operations
Kenya will from Friday cut power tariffs by up to a third for large businesses and manufacturers that shift their operations to late night hours.
The country's Energy Regulatory Commission (ERC) says the discounted tariffs are for commercial and industrial power users who operate from 10pm to 6am when most households and businesses shut down and electricity demand is low.
The energy charge billed by Kenya Power for commercial consumers metered at above 11 kilovolts (kV) will decrease by a third to Ksh5 ($0.05) per kilowatt hour (kWh) from Ksh7.50 ($0.07) per unit.
Commercial users, who are metered at between 450 volts to 11 kilovolts, will pay Ksh7 ($0.07) per unit from Ksh9.20 ($0.09).
Pass on benefits
The energy regulator expects industrialists to pass the benefits of lower costs on to consumers in form of cheaper commodities.
“The introduction of the night tariffs will help promote commercial and industrial growth in Kenya while maximising on the surplus energy available at off-peak hours,” said ERC acting director-general Pavel Oimeke.
Kenya charges firms about Ksh15.70 ($0.15) per kilowatt hour when taxes and other levies are incorporated, which is seen as uncompetitive compared with other African nations such as Ethiopia, South Africa and Egypt.
Taxes account for about a third of electricity tariffs and the government said it would consider whether some of the charges could be reduced.
The night-time electricity tariffs come as the country moves to add 300 megawatts from the Lake Turkana wind power project, which is complete but delays to construct a transmission line have hampered efforts to connect the power to the national grid.
The government has been trying to boost investments in the industrial sector in recent years with modest success.
Ease pressure
The shift by manufacturers to night-time production is expected to ease demand pressure during peak hours, which often force Kenya Power to switch on the more expensive diesel generators to stabilise the supply.
Kenya consumes less than half the peak power demand (currently 1,727 megawatts) between midnight and 5am when homes sleep.
The peak time stretches from 9am and climaxes at between 6pm and 9pm when Kenyans return home from work switching on house lighting, cooking appliances and TVs.