Kejriwal, who took oath on Saturday, also suggested an audit into the power companies in the capital, giving them time until Wednesday morning to file their objections if any.
The CM said that those consuming up to 400 units — 0 to 200 units and 201 to 400 units — of electricity a month would get 50 per cent subsidy.
The new power rates will go into effect from January 1 (Wednesday).
This would benefit some 28 of the 34 lakh households in Delhi, he added after a cabinet meeting, describing the intended beneficiaries as the poor and the middle class.
Tuesday's decision came a day after he announced that 667 litres of water would be provided free to all households in the capital who have metered connections.
Kejriwal, whose AAP made providing water and drastically cutting power rates its main election promise, also met Comptroller Auditor General (CAG) Shashi Kant Sharma to seek an audit of the power companies.
Kejriwal told the media that his government would wait for the responses from the companies before taking a final decision on audit.
"By tomorrow evening we will decide whether to go for audit or not," he said.
He estimated that the revision in electricity tariff would cost the government Rs 200 crore but Rs 140 crore of this would be borne by the power companies against their outstandings.
Kejriwal seeks CAG audit of Delhi discoms
Delhi chief minister Arvind Kejriwal on Tuesday asked the state's electricity distribution companies to state their objections to their likely audit by the nation's Comptroller and Auditor General (CAG).
"We have given notice to power companies for audit. Power companies have been asked to send their reply on why there shouldn't be an audit, by tomorrow (Wednesday)," the CM told reporters here after meeting CAG Shashi Kant Sharma to discuss the issue ahead of a meeting of the Delhi cabinet.
"Delhi government is of the view that audit of these companies can be done. But under the provisions of law, the three companies were being given the opportunity of being heard on the government audit of their finances," Kejriwal told reporters ahead of the meeting.
"They are being given time till tomorrow morning by which they will have to give their representations," he added.
The three discoms in question — Reliance companies BSES, BSES Rajdhani (BRPL) and BSES Yamuna (BYPL) — have had their accounts described earlier by the Aam Aadmi Party (AAP) as being "fudged and unreliable" and thus untrustworthy regarding their revenues situation.
AAP had also earlier demanded that tariffs should only be increased after the companies' audit by the nation's Comptroller and Auditor General (CAG).
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