Tariff
The rate at which electrical Energy is supplied to a consumer is called Tariff
.Therefore the 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 a profit on the
capital investment.
Tariff cannot be the same for all consumers. Because the cost of producing
electrical energy depends on the energy consumed by the user and his load
conditions Due consideration has to be given to different types of consumer while
fixing tariff.
Objectives of Tariff
# Recovery of cost of producing energy at power stations
# ,,
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on the capital investment in TXN & DXN
#
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of operation & maintenance of supply of electricity
# A suitable profit on the capital investment.
Desirable chars of a Tariff
* Proper return
Tariff should ensure proper return from each consumer
* Fairness
Tariff must be fair so that different types of consumers are satisfied with the rate
of charge of electricity.
*Simplicity
Tariff should be simple so that an ordinary consumer can easily understand it.
*Reasonable profit
The profit element in Tariff must be reasonable. An electric supply company is a
public utility & generally enjoys the benefits of monopoly. Therefore the
investment is relatively safe due to the non competition in the market.This calls
for the profit to be restricted to 8% or so per year.
*Attractive
The Tariff must be attractive so that large number of consumers are encouraged
to use electrical energy.
Types of Tariff
1 Simple Tariff
When there is a fixed rate per unit of energy consumed it is called simple tariff or
uniform rate Tariff
Here price charged per unit is constant i e rate will not vary with decrease or
increase in no. of units consumed. The consumption is recorded in energy meter .
This is the simplest of all Tariffs & is readily understood by the consumers.
Disadvantages :-i) There is no discrimination betn different types of consumers
ii) The cost per unit delivered is high
iii) It does not encourage the use of electricity
2 Flat rate Tariff
Here different types of consumers are charged at different per
unituniform 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
3 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
4 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
Therefore 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.
5 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
6 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.