As part of proposed reforms aimed at encouraging usage when supplies are cheapest, the Energy Ministry intends to introduce multiple electricity tariff offers that will give consumers greater control over their power bills.
The ministry recently published a white paper proposing the implementation of smart tariffs and meters to allow consumers to track when electricity prices are lowest 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.
There will be multiple electricity tariff rates depending on the time of day in this arrangement, allowing consumers to shift their consumption to off-peak times of the day when electricity is cheaper.
The power supplier, for example, can price electricity every 30 minutes throughout the day.
Electricity in Kenya has traditionally been priced as a single unit rate for consumers. Furthermore, consumers are frequently billed based on estimated readings and standardised profiles, which means that the power supplier guesses how much power was consumed.
However, with the planned smart meters and tariffs, consumers will be charged for actual consumption at the time it is used.
Smart tariffs are already in use in markets such as the United States and Europe, allowing consumers to adjust their consumption based on pricing.
Owners of electric vehicles, for example, may choose to charge them at night when power supplies are cheaper and the vehicles are not in use.
Dr Gordon Kihalangwa, the Energy Ministry’s principal secretary, told Nation on Friday that the white paper’s proposals would be subject to stakeholder input before being adopted.
A household’s smart meter monitors prices in the time-for-use billing concept, and this data can be used to shift some types of energy use to cheaper periods, thereby avoiding high, peak rate prices.
Smart meters, as opposed to traditional accumulation meters, which simply record the total amount of electricity used, record the time of use in hourly or shorter intervals.
Advanced smart meters even track pricing trends to encourage consumers to think about when they use power by displaying how much more they have paid by using it during peak periods when costs are higher.
The Ministry of Energy has already considered offering special tariffs to industrial customers in order to entice them to shift their operations to nights when demand for power is lower.
Energy costs continue to be a source of concern for Kenyan manufacturers and households. In January of this year, the state reduced power tariffs by 15% as part of the first phase of a two-part plan to reduce power costs, providing relief to households and businesses that had previously faced high electricity costs.
The government had hoped to reduce power tariffs by another 15% by the end of March by renegotiating power purchase agreements between Kenya Power and power producers.
The second phase of the power price cut, however, did not occur because the government was unable to persuade independent power producers to lower their tariffs, effectively delegating the task to the next government following the August 9 General Election.
In addition, the white paper proposes a radical change in which Kenya Power and Lighting Company (KPLC) will split its business and only distribute electricity to large 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 burden of serving industrialists, who account for more than half of its electricity sales, and millions of small household customers, who account for roughly one-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.
