The Energy ministry plans to introduce multiple electricity tariff offers which will give consumers bigger control over their power bills as part of proposed reforms aimed at encouraging usage when supplies are cheapest.
A white paper newly published by the ministry proposes to introduce smart tariffs and meters to enable consumers to track when electricity prices are at their cheapest and plan usage.
“Smart tariffs also enable consumers to have more control, choice, and flexibility over their energy use depending on temporal needs, urgency, and shifts in market prices that reflect demand and supply dynamics,” the white paper reads in part.
In this arrangement, there will be multiple electricity tariff rates depending on the time of day to enable consumers to shift their consumption to off peak times of the day when electricity is cheaper.
The power supplier can, for example, price electricity every 30 minutes over the 24 hours of a day.
Traditionally, electricity has been priced as a single unit rate for consumers in Kenya. In addition, consumers are often billed based on estimated readings and standardised profiles meaning that the power supplier guesses how one consumed power.
But with the planned smart meters and tariffs, it means consumers will be charged for actual consumption at the time they actually use it.
The smart tariffs concept is already in use in markets such as the US and Europe, enabling consumers there to adjust consumption based on pricing.
For example, owners of electric vehicles may opt to charge them at night-time when power supplies are cheaper and the vehicles are not in use.
Dr Gordon Kihalangwa, the principal secretary at the Energy ministry, told Nation on Friday that proposals in the white paper would be subject to stakeholder input before adoption.
In the time-for-use billing concept, a household’s smart meter monitors prices and this data can be used to move some types of energy use to cheaper periods, helping to avoid high, peak rate prices.
Unlike traditional accumulation meters, which simply record the total amount of electricity used, smart meters record the time of use in hourly or shorter intervals.
Advanced smart meters even track pricing trends to encourage consumers to think about when to use power by showing them how much more they have paid by using it during peak periods when costs are higher.
The Ministry of Energy already toyed with the idea of special tariffs for industrial consumers to lure them into shifting their operations to nights when demand for power reduces.
Costly energy remains a concern among manufacturers and households in Kenya. The State cut the power tariffs by 15 per cent in January this year in the initial phase of a two-part plan to lower power costs, handing relief to households and firms that have braved high electricity costs.
The government had planned to achieve a further 15per cent power tariff cut by the end of March through renegotiation of power purchase agreements between Kenya Power and power producers.
However, the second phase of the power price cut did not happen after the government failed to convince independent power producers to lower their tariffs, effectively pushing the task to the next government after the August 9 General Election.
The white paper has also proposed a radical change in which Kenya Power and Lighting Company (KPLC) will split its business and only distribute electricity to larger commercial and industrial consumers.
The Rural Electrification and Renewable Energy Authority (REREC) would take over the role of distributing electricity to household consumers—relieving KPLC of the pressure of juggling between serving industrialists who account for more than half its electricity sales and millions of small household customers who take up about a third of dispatched power.
“Reconfigure KPLC and REREC across consumer segments so that KPLC is positioned to serve large commercial and industrial consumers while REREC is positioned to serve the social mandate for household consumers” the white paper said.
