The power discount scheme will be extended to all businesses operating at night as the energy regulator targets the idle capacity in its latest push for 24-hour production.
The changes planned by the Energy Regulatory Commission (ERC) on the night-time tariffs introduced last December will see businesses like cafeterias and boutiques save millions of shillings.
So far, only 1,000 manufacturers and large businesses have been enjoying the night-time discounted tariffs that are billed at half the market rates.
They are applicable from 10 pm to 6 am, an off-peak window during which electricity consumption is low.
"We plan to remove the consumption capping or minimum consumption and make it that any consumption at off-peak enjoy the discounted tariff," ERC director-general Pavel Oimeke said.
He said that electricity distributor Kenya Power is procuring smart meters for small and medium-sized enterprises (SMEs), like those installed at the premises of large power users (above 15,000 units monthly).
The smart meters will sense and adjust customers' billing for both off-peak and on-peak power consumption.
The off-peak tariffs review is part of the proposals that the energy regulator seeks to implement in coming months.
Currently, only large businesses and factories enjoy the 50 per cent discounted night rates due to the strict eligibility criteria that firms have to meet to enjoy the cut tariffs.
Manufacturers that operate at 100 per cent capacity daily, and have no room to increase operations and grow their power intake enjoy only a five per cent discount.
The ERC is seeking to relax these conditions to make the discount available regardless of the firm's consumption levels.
At the moment, firms have to exceed their normal power consumption to be eligible for the discount scheme.
This meant increasing their production at night over and above the capacity during the day -- a deliberate government move to prevent manufacturers from shifting all their production lines to off-peak time.
The condition was aimed at ensuring Kenya Power's revenues are not hurt.For instance, a company consuming 1,000 kilowatt hours (kWh) per day had to exceed the 1,000 units, with the additional units attracting the 50 per cent discount.
Energy charge discount
The 50 per cent discount will also be revised downwards to a yet to be determined rate.
"We are working on a level of energy charge discount that leaves Kenya Power revenue neutral. It will definitely not be at 50 per cent energy charge," said Mr Oimeke. Kenya's commercial and industrial tariffs stand at an average of Sh14 per unit, which is seen as uncompetitive compared with other African nations such as Ethiopia, South Africa and Egypt.
Last month, Kenya's power demand hit 1,802 megawatts, setting a new record, but which still leaves more than 500 megawatts idle or as reserve margin.
The increase in consumption is seen as partly determined by the discounted power arrangement for large users, including factories and businesses operating 24 hours.
It is expected that the peak demand will keep rising when small enterprises join the special rates plan and more businesses extend operations into the night.