The tariff system in Kenya as prescribed by the regulator (EPRA) and the primary utility company (Kenya Power) is not as straight-forward as one would think. The electricity provider’s approach looks to account for a variety of factors affecting the energy generation, transmission, and consumption chain. This article aims to provide an overview of the billing system then dive into a unique tariff system commonly referred to by the utility as the night or off-peak tariff.
What data is required?
The data required for successful billing in Kenya involves the most crucial aspect of electricity consumption, which is demand in kW and kVA. These two parameters provide a broad view of a consumer’s consumption trends and help account for the majority of technical considerations in the generation and transmission of electricity. Additionally, said parameters provide the utility with the ability to identify a consumer’s efficiency and in so doing apply punitive incentives to ensure the latter consumes electricity efficiently.
The majority of professionals in the energy space in Kenya have encountered the concept of surcharges within the context of electricity billing. These are additional charges the utility adds to the electricity bill to account for processes not directly involved in the process of electricity generation, and transmission, but crucial to the fidelity of the aforementioned processes.
- Fuel Cost Charge (FCC)
- Foreign Exchange Rate Fluctuation Adjustment (FERFA)
- Inflation Adjustment (IA)
- WARMA Levy
- ERC (Formerly Energy Regulatory Commission, now Energy and Petroleum Regulatory Authority) Levy
- Rural Electrification Program (REP) levy,
- Power factor surcharge
- Value-added Tax.
More information on these surcharges, what they mean, and their implication on electricity bills is available on Stima-regulus.
The Tariff System
Tariffs in Kenya are varied depending on a consumer’s actual consumption. A home’s bill will be a little different compared to a large company’s bill. Kenya Power’s tariff system has 8 levels. The table below details these levels.
Off-peak (Night Tariff)
As indicated by Figure above, clients billed on CI1 to CI5 enjoy a special off-peak tariff. This tariff applies to energy consumption on what the regulator and utility call off-peak time. These periods are shown below:
However, the facility has to qualify for this off-peak rate. Here, three factors come into play. The first in the facility consumption on the off-peak hours across the month. The second is the facility’s consumption on the remaining hours across the month. Lastly, and even more crucial to this calculation is the facility’s threshold at that point.
From the regulator, the determining factors for qualification are the threshold and the low-rate. The threshold is the facility’s average consumption over the past six months adjusted for a growth factor of 6%. The threshold is recalculated every 6 months. The client qualifies if the month’s consumption is above the threshold.
If the client qualifies, the consumption value on the special night tariff is calculated by subtracting the average value of low-rate from the last six months from the current month’s low-rate to get the value. At this point, we’ll have the average value of low-rate from the last six months, the difference between the average 6 months low-rate and the current month’s low-rate, and the high-rate. The high-rate and the average 6 months low-rate will be billed on the normal rate while the difference between the low-rate and average 6 months low-rate will be eligible for the special tariff.
Figure above, demonstrates a sample calculation of the night tariff. The highlighted field shows where the threshold was recalculated.
The tariff system in Kenya presents an important tool for study into the metrics and considerations as pertains to energy consumption. A deeper study of this system has the potential to provide a clear look into the possibility of creating mathematical models to take advantage of such a system. The next paper will focus on using one form of modeling to predict and possibly control the use of this untapped cost control opportunity.
Watch out for part 2 as we explore the mathematical models that you can apply to better if you qualify for off-peak tariff.
In the meantime, Join the conversation about calculating and predicting savings that can be realized by utilizing off-peak tariff on Raynow Energy Forums. This is a forum made of energy professions like you.
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