SMEs to pay half power costs in off-peak hours
Welders at a construction site in Ngara, Nairobi on May 9, 2019.
Small businesses will pay half of the electricity prices should they switch their activities to off-peak hours if a new tariff application by Kenya Power is approved.
Kenya Power wants for the first time to introduce a time-of-use (ToU) tariff for small businesses that use more than 30 units of electricity on average per month.
The special tariff will see the businesses pay just Sh10.54 per unit during off-peak hours which is half the Sh21.08 per unit that they will pay for power usage during periods of high demand.
This tariff however only kicks in once the business that has registered for this tariff has consumed the amount of electricity that they use on average during the month.
For instance, if a salon uses on average 200 units each month, they will start enjoying the cheaper ToU tariff during off-peak hours when they have consumed 200 units.
This tariff is currently a preserve of large industrial customers who consume more than 15,000 units of power monthly.
The cheaper ToU tariff is part of the proposed new tariff submitted by the utility to the Energy and Petroleum Regulatory Authority (Epra) in October last year.
The new tariffs are expected to take effect on April 1 and will be in place for the next three years.
The utility has for years pushed for a review of the current power tariffs arguing that its revenue requirements have grown sharply despite revenues from electricity remaining the same forcing it to rely on increasing sales.
“In order to achieve this broad mandate, there is need for an electricity retail tariff that is just and reasonable to allow KPLC maintain its financial integrity, attract capital, operate efficiently and compensate investors for risks assumed,” said the company.
At the same time, category CI2 industrial customers will enjoy an off-peak tariff of Sh7.51 per unit compared to Sh15.02 during normal periods.
Kenya Power sold 1,670 gigawatt-hours (GWh) of electricity to these small commercial customers, making them the utility’s third largest customers behind large and commercial customers (4,864GWh) and domestic customers (3,166GWh).
The move is part of the company’s efforts to boost electricity consumption during off-peak hours especially at night between 12 am and 4 am when domestic and commercial activities are at their lowest.
While the utility pays for power generated during this period, the electricity is often unused piling customers with capacity charges for idle power.
