Tariff
Consumer can be proceeded to use this power if it is sold at proper rate tariff literally means rates or charges for a
service rendered to a consumer. In case of supply of an electrical power, tariff refers to the rate at which a consumer is
charged for the electrical power supplied.
● An Electric Supply Company invest large amount in generation, Transmission and distribution of electrical energy.
● Power companies source of revenue is tariff, which obviously targets return on investment as well as recovery of
operating cost.
● Even though tariff includes overall cost generation, delivery as well as profit yet all categories of consumers can't be
charged same. This is because of cost of producing electricity considerable it depends upon magnitude of electrical
energy consumed and load conditions of the user.
● So categories of consumer deserves due consideration as far as fairness interests is concerned.
Various elements of tariff are :
Return on investment
Operation and maintenance cost
Depreciation cost
Taxes amount
Fuel costs
● Consumer has to pay for capital as well as running costs.
● Tariff policy Framework should support energy conservation as the core objective.
Terms involved in Tariff
1.Unit consumed
2. Connected load
3. Fixed charges
4. Electricity tax
5. Electricity duty
6. Tariff structure
7. Fuel surcharge
1. Units consumed - units consumed specifies the aggregate amount of electricity utilized for certain duration
It is obtained from meter reading.
2. Connected load - connected load is the total wattage of appliances which are been used on the sanction connection
It has an effect on fixed charges for a particular connection
3. Fixed Charges - it's a fix amount of charge included in monthly electricity bill which depends on type of connection
and connected load.
4. Electricity tax - some States put text on transaction of electricity. This is often charge in percentage of total amount
of Bill.
Point to be noted that government received this amount and not be utility.
5. Electricity duty - some States apply duty on supply of electricity which is obtained charged an additional cost per
unit for may also be in percentage.
Point to be noted that government received this amount and not the utility.
6. Tariff structure - the rate at which consumption unit is charge in energy prices specified by 13 structure.
7. Fuel surcharges - tariff structure is set up for one year or two, cost of generation changes every month. Fuel
, surcharges apprehends changing cost of generation.
It is applied per unit
Objective of tariff
1. Equal distribution of cost -
The most important objective of the tariff is the fairly equal distribution of cost of energy supply for different classes
of use.
Charges to be applied for conception should be justifiable for each category of use.
2. Recovery of capital investment -
Utility invest use amount of money in the system right from the generation to serve the energy in the consumer
premises.
Recovery of cost incurred in all elements of power system i.e., generation, Transmission and distribution of energy.
3.Recovery of running cost -
Apart from initial cost, in demand some cost to get the system healthy in running condition.
Recovery of cost incurred in operation and maintenance and supply of equipments. 4. Recovery of miscellaneous
cost - distribution of energy to the consumer in valves many associated services in addition to only supply.
Recovery of cost invested in misc services such as,
I. Cost of meeting equipments
II. Billing
III. Cost of collection,etc.
IV. Concluding a satisfactory return on their total investment is an Ultimate objective.
LT and HT tariff :
● Electricity tariff can have various form which varies from country to country as well as different market of the same
country
● Scheme also differ according to consumer categories
● Consumer category are :
Residential
Commercial
Industrial
Agricultural
Different types of tariff used in practice
Types of tariff
1. Flat demand tariff
2. Simple tariff
3. Flat rate tariff
4. Step rate tariff
5. Block rate tariff
6. Two part tariff
7. Three part tariff
Consumer can be proceeded to use this power if it is sold at proper rate tariff literally means rates or charges for a
service rendered to a consumer. In case of supply of an electrical power, tariff refers to the rate at which a consumer is
charged for the electrical power supplied.
● An Electric Supply Company invest large amount in generation, Transmission and distribution of electrical energy.
● Power companies source of revenue is tariff, which obviously targets return on investment as well as recovery of
operating cost.
● Even though tariff includes overall cost generation, delivery as well as profit yet all categories of consumers can't be
charged same. This is because of cost of producing electricity considerable it depends upon magnitude of electrical
energy consumed and load conditions of the user.
● So categories of consumer deserves due consideration as far as fairness interests is concerned.
Various elements of tariff are :
Return on investment
Operation and maintenance cost
Depreciation cost
Taxes amount
Fuel costs
● Consumer has to pay for capital as well as running costs.
● Tariff policy Framework should support energy conservation as the core objective.
Terms involved in Tariff
1.Unit consumed
2. Connected load
3. Fixed charges
4. Electricity tax
5. Electricity duty
6. Tariff structure
7. Fuel surcharge
1. Units consumed - units consumed specifies the aggregate amount of electricity utilized for certain duration
It is obtained from meter reading.
2. Connected load - connected load is the total wattage of appliances which are been used on the sanction connection
It has an effect on fixed charges for a particular connection
3. Fixed Charges - it's a fix amount of charge included in monthly electricity bill which depends on type of connection
and connected load.
4. Electricity tax - some States put text on transaction of electricity. This is often charge in percentage of total amount
of Bill.
Point to be noted that government received this amount and not be utility.
5. Electricity duty - some States apply duty on supply of electricity which is obtained charged an additional cost per
unit for may also be in percentage.
Point to be noted that government received this amount and not the utility.
6. Tariff structure - the rate at which consumption unit is charge in energy prices specified by 13 structure.
7. Fuel surcharges - tariff structure is set up for one year or two, cost of generation changes every month. Fuel
, surcharges apprehends changing cost of generation.
It is applied per unit
Objective of tariff
1. Equal distribution of cost -
The most important objective of the tariff is the fairly equal distribution of cost of energy supply for different classes
of use.
Charges to be applied for conception should be justifiable for each category of use.
2. Recovery of capital investment -
Utility invest use amount of money in the system right from the generation to serve the energy in the consumer
premises.
Recovery of cost incurred in all elements of power system i.e., generation, Transmission and distribution of energy.
3.Recovery of running cost -
Apart from initial cost, in demand some cost to get the system healthy in running condition.
Recovery of cost incurred in operation and maintenance and supply of equipments. 4. Recovery of miscellaneous
cost - distribution of energy to the consumer in valves many associated services in addition to only supply.
Recovery of cost invested in misc services such as,
I. Cost of meeting equipments
II. Billing
III. Cost of collection,etc.
IV. Concluding a satisfactory return on their total investment is an Ultimate objective.
LT and HT tariff :
● Electricity tariff can have various form which varies from country to country as well as different market of the same
country
● Scheme also differ according to consumer categories
● Consumer category are :
Residential
Commercial
Industrial
Agricultural
Different types of tariff used in practice
Types of tariff
1. Flat demand tariff
2. Simple tariff
3. Flat rate tariff
4. Step rate tariff
5. Block rate tariff
6. Two part tariff
7. Three part tariff
