The need to spur a 24–hour economy is gaining momentum as the country seeks to leverage on availability of stable and quality electricity. To encourage this drive, the introduction of “Time of Use” (ToU) tariff is expected to see commercial business, especially in the manufacturing sector, increase their operations during the night.
With ToU tariff, manufacturers who increase their night production will benefit from much lower power tariff, leading to lower electricity bills. Kenya Power (KP) started implementing this initiative in December last year. In January, 850 large power customers benefitted from the ToU tariff compared to 804 customers in December.
Night consumption has increased thereby improving KP’s overall sales. For instance, in the month of December an additional 21.8 GWh was consumed. During a recent visit by the Energy Cabinet secretary Charles Keter to Bamburi Cement factory in Athi River, we were informed that the company will be taking up an additional load of 150MW for their new processing plant.
Other companies which have adopted the ToU tariff have indicated that they intend to employ more people to manage the night shift. The aim of the new tariff is not to have customers shift their production to off-peak hours but it is designed to stimulate demand by providing an incentive to increase production.
The discounted rates will therefore be applicable on energy consumed during defined off-peak hours above each customer’s daily consumption. As a condition, benefiting customers will be required to meet their monthly energy consumption threshold.
Any units consumed over and above that threshold are billed at the discounted rate of 50 per cent for energy consumed at off-peak hours. The threshold will be determined from the monthly energy consumption of the previous six consecutive months.
This means they have to not only maintain normal production but increase it and then any production above what the customer carries out at off-peak benefits from the discount. Large commercial and industrial customers already operating at normal production capacity levels will benefit from a five per cent discount for their off-peak consumption.
Whereas large power consumers will benefit from decreased production costs, the 50 per cent reduction of tariffs during off-peak hours will also help in efficient utilisation of power generated during low energy demand periods. Ken Tarus is the managing director and chief executive of Kenya Power