tariff
The rate at which electrical energy is
supplied to a consumer
 Therefore tariff naturally becomes
attention inviting for electric supply
company
 The supply company has to ensure that
the tariff is such that it not only recovers
the total production cost of electricity but
also earns profit on the capital
investment.

The tariff cannot be the same for all
consumers as the cost of producing e’
power depends considerably on the e’
energy consumed by the user & his load
conditions.
 Therefore due consideration has to be
given to different types of consumers
 (i.e. .)industrial, domestic and
commercial)
 While fixing tariff.

Objectives of tariff
Recovery of cost of production
 Recovery on the capital investment on pp
 Recovery on the capital investment on
TXN & DXN s/m
 Recovery of cost of operation and
maintenance of equipments like enery
meter ,billing equipments etc.
 Earn a suitable profit on capital
investment

Desirable characteristics of a tariff
Proper return – this will ensure continuous
& reliable service to the consumers
 fairness – tariff must be fair so that
different types of consumers are satisfied
with the rate
 Simplicity – must be simple so that an
ordinary consumer can easily understand
it.

Reasonable profit – profit element should
be reasonable
 Attractive – it should be attractive so that
large number of consumers are
encouraged to use e’ energy

Types of tariff
Simple tariff
 Flat rate tariff
 Block rate tariff
 Two part tariff
 Max. demand tariff
 Power factor - 1)kVA max. demand tariff
2)sliding scale tariff
3)kW and kVAR tariff

Simple tariff
Here there is a fixed rate per unit of
energy consumed.i.e. price charged per
unit is constant.
 The rate will not vary with decrease or
increase of no of units consumed
 The consumption is recorded by Energy
meter
 This is the simplest of all tariffs and is
readily understood by the consumers

disadvantages
There is no discrimination between
different types of consumers
 The cost per unit delivered ius high
 It does not encourage the use of
electricity

2. Flat rate tariff
Here different types of consumers are
charged at different uniform per unit
rates.
 The consumers are grouped into different
classes and each class is charged at
different uniform rates.
 For example the flat rate /kWhr for
lighting load may be 60paise, whereas it
may be 55paise/kWhr for power loads

Advantages
Simple in calculations
 More fair to different types of consumers

disadvantages
Separate meters are required for lighting
loads, power loads etc. this makes the
tariff expensive and complicated.
 A particular class of consumers are always
charged at the same rate irrespective of
the magnitude of energy used.

Block rate tariff
When a given block of energy is charged
at a specified rate and the succeeding
blocks of energy are charged at
progressively reduced rates , it is called
block rate tariff
 Here the energy consumption is divided
into blocks and the price per unit is fixed
in each block.

The price p.u. of the 1st block is the
highest and it is progressively reduced for
the succeeding blocks of energy.
 (e.g.)for 1st 30units may be charged
@60paise p.u. and next 25 units @55
paise p.u. remaining additional block @30
P.U.

Advantages

THE CONSUMER GETS INCENTIVE TO
CONSUME MORE E’ ENERGY
disadvantages

IT LACKS A MEASURE OF CONSUMERS
ACTUAL DEMAND
Two part tariff
When the rate of electricity is charged on
the basis of max. demand of the
consumer &the unit consumed ,it is called
2 part tariff.
 Here the total charge is split into 2
components 1)fixed charges 2) running
charges

Total charges
Fixed charge
 Depends on max.
demand
 It is assessed from the
total connected load
 It is in kW
Running charge
 Depends on the no of
units consumed
 It is in kWhr
Total charge
Rs (b * kW + c * kWhr)
Where b - charge/kW of max.
demand
C – charge/ kWhr of energy
consumed
Advantages
Easily understood
 It recovers fixed charge which depends on
max. demand, but are independent of
units consumed

disadvantages
The consumer has to pay fixed charges
irrespective of the fact whether he has
consumed energy or not.
 There is always error in assessing the
max. demand of the consumer .

Max. demand tariff
It is similar to 2 part tariff with the only
difference that max. demand is actually
measured by installing max. demand
meter in the premises of the consumer .
 This removes the objection of 2 part tariff
where max. demand is assessed on the
basis of total connected load.


This tariff is mostly applied to big
consumers. However it is not suitable fo
small consumers as a separate max.
demand meter is required
Power factor tariff
Here the power factor of the consumer is
taken into account.
 P. f. plays an important role in ac systems
 A low p f results in so many
disadvantages like v drop, loss etc
 Therefore a consumer having low p f
should be penalized.

Types of power factor tariffs
kVA max. demand tariff
It is a modified form of 2 part Tariff
Here fixed charge is in kVA not kW as kVA is
inversly proportional to pf(pf = kW/kVA).
Therefore a consumer having lpf has to
contribute more towards fixed charges
This tariff encourages the consumer to
operate their equipments at improved pf.

Sliding scale p.f. tariff
Also called average pf tariff.
Here average pf , say 0.8 lagging is taken as
reference
If pf of the consumer falls below this pf
suitabe charges are made.
If pf is above this reference a discount is
allowed

kW and kVAR Tariff
Here both active and reactive power
supplied are charged separately.
A consumer having lpf will draw more
reactive power and hence shall have to
pay more.
