12-04-2026
Tariffs
Introduction
• Rate at which electrical energy is sold to the consumers
• The electricity tariffs depends on the following factors
• Type of load
• Maximum demand
• Time at which load is required.
• The power factor of the load.
• The amount of energy used.
1
12-04-2026
Types
• Three-part tariff
• Flat Demand Rate tariff
• Straight-line Meter rate tariff
• Block meter Rate tariff
• Two-part tariff
• Power factor tariff
• Seasonal rate tariff
• Peak load tarif
Three-part tariff
• The three-part tariff is in the form of and it is applied to the big consumer.
𝐶 = 𝐴𝑥 + 𝐵𝑦 + 𝐷
where,
C – total charge for a period (say one month)
x – maximum demand during the period (kW or kVA)
y – Total energy consumed during the period (kWh)
A – cost per kW or kVa of maximum demand.
B – cost per kWh of energy consumed.
D – fixed charge during each billing period
2
12-04-2026
Flat demand rate tariff
• The flat demand rate tariff is expressed by the equation C = Ax.
• In this type of tariff, the bill of the power consumption depends only
on the maximum demand of the load.
• The generation of the bill is independent of the normal energy
consumption.
• This type of tariff is used on the street light, sign lighting, irrigation,
etc., where the working hours of the equipment are known.
• The metering system is not used for calculating such type of tariffs.
Straight-line meter rate tariff
• This type of tariff is given by the equation C = By.
• The generation of the bills depends on the energy consumption of the
load.
• Thus, different types of bills are generated for different consumers.
• The charges for different types of consumption depends on the load
and diversity factors of the load.
• For example, the tariff for small devices is less as compared to the
power loads.
• Hence different meters are used for measuring the power consumption.
3
12-04-2026
Block meter rate tariff
• In this type of tariff, the energy consumption is distinguished into
blocks.
• The per unit tariff of the individual block is fixed.
• The price of the block is arranged in the decreasing order. The first
block has the highest cost, and it goes on decreasing accordingly.
• The price and the energy consumption are divided into three blocks.
• The first few units of energy at a certain rate, the next at a slightly
lower rate and the remaining unit at a very lower rate.
Two-part tariff
• In such type of tariff, the total bill is divided into two parts.
• The first one is the fixed charge and the second is the running charge.
• The fixed charge is because of the maximum demand
and the second charge depends on the energy consumption by the load.
• Total Cost = [A (kW) + B (kWh)]
• The factor A and B may be constant and vary according to some
sliding scale.
4
12-04-2026
Power factor tariff
• The tariff, which depends on the power factor of the load is known as
the power factor tariff. The power factor tariff is mainly classified into
two types :
• kVA maximum demand tariff – This is also a two-part tariff.
• 𝑇𝑜𝑡𝑎𝑙 𝑐ℎ𝑎𝑟𝑔𝑒𝑠 = 𝐴 𝐾𝑉𝐴 + 𝐵 𝐾𝑊ℎ
The low power factor increases the KVA rating of the load.
• kWh and kVarh tariff – The bill is calculated by the sum of the kVarh and
Kwh rating of the load
• 𝑇𝑜𝑡𝑎𝑙 𝐶ℎ𝑎𝑟𝑔𝑒𝑠 = 𝐴"(𝐾𝑊ℎ) + 𝐵′′(𝐾𝑉𝐴𝑟ℎ)
The kVarh is inversely proportional to the power factor of the load.
Sliding Scale or Average power factor tariff
• In Average power factor tariff, the particular value of the power factor
is taken as reference.
• If the power factor at the consumer end is low, then the consumer has
to pay the additional charges.
• Similarly, if the power factor of the load is above from the reference
value, then the discount will be given to the consumer.
10
5
12-04-2026
Seasonal rate tariff
• Such type of tariff measures the high price in kWh used by the
consumer in one complete year.
• It is also known as the on peak season tariff.
• If the low consumption occurs in the year, then it called the off-peak
season tariffs.
11
Peak-load tariff
• Such type of tariff is similar to seasonal tariffs.
• The only difference is that the seasonal tariff measures the peak hour
of the year and the peak tariff calculates it for the day.
• If the power consumption is high, then it is known as the on-peak
tariff, and for low power consumption, it is called off-peak load tariffs.
12