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WELCOME
TO
EED511
ELECTRICAL DESIGN AND POWER UTILIZATION
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Topic 1 - TARIFFS
The rate at which the electrical energy is supplied to the consumer is known as Tariff

Tariff must include the total cost of producing and supplying
electrical energy + profit

Tariff depends upon the load condition and the magnitude of
electrical energy consumed by the consumers (not same)

Industrial, domestic, commercial, etc.
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Objectives of Tariff

Recovery of cost of producing electrical energy at the
power station

Recovery of cost on the capital investment in transmission
and distribution system

Recovery of cost of operation and maintenance of
supply of electrical energy (metering, transformer,
lines)

A suitable profit on the capital investment
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Characteristics of a Tariff
1. Proper return – Total receipt from the consumers must
be equal to the cost of producing and supplying
electrical energy plus reasonable profit.
2. Fairness – Consumers satisfaction with the rate,
differentiation of pricing based on demand.
3. Simplicity – Complicated Tariff is not good for the
public
4. Reasonable profit
 profit element must be reasonable
 monopoly done by supply company will not be
accepted by the public
 profit margin kept to 8% - 10% per annum.
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Characteristics of a Tariff
5. Attractiveness
 Should be attractive enough to encourage a large
number of consumers to use electrical energy
 Efforts should be made to fix the tariff in such a way that
consumers can pay easily
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Types of Tariff
1.
Simple Tariff
2.
Flat Rate Tariff
3.
Block Rate Tariff
4.
Two Part Tariff
5.
Maximum Demand Tariff
6.
Three Part Tariff
7.
Power Factor tariff
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1. Simple Tariff

Fixed rate per unit of energy
 Price charged per unit is constant and do not vary with
change in units consumed
 Consumption is recorded by meter at consumer premises
 Simple and easy for consumers
 Disadvantage – no discrimination, cost per
unit delivered is high
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2. Flat Rate tariff
Different types of consumers are charged at different uniform per unit
rates
 Consumers are grouped into different classes and each class
is charged differently (Light, Power, etc.)
 Classes are made taking into account their diversity factor
and load factor
 More fair to different types of consumers and simple to
calculate
 Disadvantage of Flat Rate Tariff
 Separate meters are required for different loads (expensive)
 Particular class of consumers is charged with the same rate
irrespective of the magnitude or energy consumed
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3. Block Rate Tariff
When a given block of energy is charged at a specific rate and
the succeeding blocks of energy are charged at progressively
reduced rates
Energy consumption is divided into block and
the price per unit is fixed in each block
First block price per unit is high and other
blocks lower
Consumers get incentives to consume more,
increases load factor and reduces generation
cost
Used of majority of residential and small
commercial consumers
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4. Two- part Tariff
When the rate of electrical energy is charged on the basis of maximum demand of
the consumer and the units it consumes.
 Total charge to be made from consumers is split into 2
components
 fixed charge (MD)
 Running charge (units consumed)
 ChargeT = Rs[b(kW) + c(kWh)]
 Mostly for industrial consumers
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Two – part Tariff continued…
Advantages of Two-part Tariff
 Easily understood by consumers
 Recovers the charges which depends upon the
maximum demand of the consumer but are
independent of the units consumed
Disadvantage
 Consumer has to pay the fixed charges irrespective of
usage
 Always error in assessing MD of consumers
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5. Maximum Demand Tariff
Similar to Two-part Tariff except that the MD is measured by the MD meter
in the premises of the consumer (removes the objective of the TPT)
 Mostly applies to big consumers and not suitable for small
consumers like residential loads (separate MD meter is required)
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6. Three-Part Tariff
When the total charge to be made by the consumer is split into three parts
(Fixed, semi-fixed charge and running charge)
Charge T = Rs [a + b(kW) + c(kWh)]
 Mostly applicable to bigger consumers only.
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7. Power factor Tariff
The Tariff in which the factor of the consumer’s power factor is taken into account
 Power factor increases the rating of the station equipment and
line losses. Therefore consumer with the low pf has to be
penalized.
 Eg. kVA MD Tariff, Sliding Scale, kWh/kVAR Tariff
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i. PFT – kVA MD Tariff
 Modified from Two–part Tariff
 The fixed charges are made on the basis of MD in kVA
and not in kW (consumers with low pf has to pay towards
the fixed charges)
 Encourages consumers to operate their load at improved
pf.
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ii. PFT – Siding Scale Tariff
 Known as Average Power Factor tariff
 If pf of a consumer falls below the reference pf (say 0.8
lag), suitable additional charges are made.
 If the consumer is above the reference pf value, consumer
is awarded with the discount.
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iii. PFT – kWh/kVAR Tariff
 Both active power (kWh) and reactive power (kVAR)
supplied are charged separately
 Consumer with low pf will draw more reactive power and
hence shall have to pay more charges.
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Discussions
EED511 Electrical Design and Power Utilisation_S1_2023_SM