Tariff

It is the rate at which electrical energy is supplied to the consumer. As we know that electrical energy is produced by a power station that is to be delivered to large number of consumers. The consumers can be convinced to use the electrical energy if it is sold at reasonable rates that are fixed by the company. So, the tariffs are included cost of production and reasonable profits. Tariffs differs on the types of consumers because every consumers has different load.

General Form of Tariff 

A= br + cy + d

Where A=Total amount

r=kW  and y=kWh

b=charges per kW of maximum demand

c=charges per kWh of energy consumed

d= fixed charges..

Objectives of Tariff 

The main objectives of tariff are:-

1. To recover the cost of transmission, distribution and generation.
2. To recover the cost of maintenance, metering, billing etc.
3. A reasonable profit.

Characteristics of Tariff

1. Fairness:- It should be uniform and fair so that different consumer will be satisfied with the rate/charges of electrical energy. For example large consumers should be charged at lower rate than the small consumers.

2. Simple :- Tariff should be simple so that it can be easily understand by consumer.

3. Proper Return:- It means that the total receipts from the consumers must be equal to cost of producing, delivering plus profits so that company ensures continuous and reliable service to the consumers.

4. Attractive:- It should be attractive so that consumers are inspire to use the electrical energy.

5. Reasonable Profit:- The profit element in the tariff should be reasonable.

Factors Involve Tariff 

1. The tariff should be simple and understandable to the consumers.
2. The tariff should be uniform over a large population.
3. The tariff should provide incentive for using power during of peak hours.
4. The tariff should have a provision of penalty for low power factor.

Types of Tariff 

1. Simple Tariff

It is also called uniform tariff. These are the tariff which have fixed rate per unit of energy consumed. It does not change with increase or decrease in the number of units consumed. With the help of energy meter we record electrical energy.

Advantages of Simple Tariff 

• It is simple and easily understandable to the users.
• The consumer has to pay according to the unit consumption.

Disadvantages of Simple Tariff 

• The cost of energy consumption per unit delivered is very high.
• It does not encourage the use of electricity.

2. Block Rate Tariff

Here the electricity is charged in blocks. The price per unit of energy is fixed for each block. For example, the first 50 units may be charged 60 paise per unit and for next 25 unit for 55 paise per unit of energy will be charged.

Advantages of Block Rate Tariff 

• The consumer will get more benefits when he use more energy consumption.
• There is no need of second energy meter.

Disadvantages of Block Rate Tariff 

• The supplier does not get any return of the connection given to the consumer, if he does not consume electrical energy in a particular time.

3. Flat Rate Tariff 

In this type of tariff consumers are classified into groups into different classes and each classes are charged with different rates.

Advantages of Flat Rate Tariff

• It is more fair to different types of consumers.
• It is quite simple in calculation.

Disadvantages of Flat Rate Tariff

• Separate meters are required for light load and power load because tariffs vary according to supply.

4. Two-Part Tariff 

In this tariff, electricity is charged considering the maximum demand of consumers as well as units consume by the consumers. Here charges are made in two parts:-

• Fixed Charges:- They depend upon the maximum demand of the consumer.
• Running charges:- It depends upon the no. of units consumed by the consumer.

Total charges =Rs(b*kW + c*kWh)

where, b=charges per kW of maximum demand

c=charges per kWh of energy consumed

Advantages of Two-Part Tariff 

• Easily understandable to consumers.
• It recovers the fixed charges which depend upon the maximum demands.

Disadvantages of Two-Part Tariff  

• Consumers has to pay fixed charges even when he has not consumed energy.
• There is always an error in assessing the maximum demand of the consumers.

5. Three Part Tariff 

These tariff are divided into three parts viz., fixed charges, semi fixed charges and running charges.

Total charges = Rs.(b*kW + c*kWh+d)

where, b=charges per kW of maximum demand

c=charges per kWh of energy consumed

d= fixed charged made during each billing period. It includes labour charges and secondary distribution charges etc.

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