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Tariff Factors affecting the framing of tariff
Different method of charging a consumer or rates of payments by the Principal factors involved in fixing of a tariff are
consumer, for consuming electrical energy are known as tariffs.
1. Proper return is secured from each type of consumer.
Objective of Tariff Tariff is fixed such that it will
i. result in a revenue meeting all the expenditure
The main objective of the tariff is to distribute equitably the cost of ii. creates fund for future expansion to meet an anticipated load.
supplying energy among the various category of use.
2. The tariff should reflect the cost of the maximum demand of the
A tariff should cover the following items: consumer type in proportion to the system peak demand.
• Recovery of cost of capital investment in generating,
3. Time at which maximum demand occurs
transmitting and distributing equipment.
• encouraged to use power during off peak hours
• Recovery of cost of operation, supplies and maintenance of
• penalized for high loads demanded at system peak.
equipment.
• Recovery of cost of metering and billing equipment i. The load factor improves when a load is supplied during off-peak
hours. Improved load factor reduces cost per kWh generated.
• Recovery of cost of collection and miscellaneous services .
• A satisfactory return on the total capital investment. ii. If the maximum demand of the consumer coincides with the
system peak, additional capacity charge is applied.
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Factors affecting the framing of tariff Factors affecting the framing of tariff
4. Power factor is important for plant economics. Causes of low p.f. • Type of service rendered also determines the tariff.
(a) Higher plant capacity is needed • Responsibility of state to provide some basic necessities to its
(b) Cost of I2R losses increases citizens.
(c) Poor voltage regulation.
• Electricity supply to a domestic consumer, having light and
The cost of generation increases due to p.f. correction
equipment
fan points, cannot be charged at higher rates.
• Supply of electrical energy to agricultural loads cannot be
5. Cost of electrical energy is reduced by using a large amount of charged at a higher rate because of national concern for
energy for longer periods. agricultural output.
(increased energy consumption spreads the fixed charges over a greater number
of units, reducing cost per kWh.) • Higher rate for the consumers using electricity for extra
A big consumer is charged at a lower rate than a small consumer. comforts
air-conditioning,
entertainment,
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Important types of tariff Flat demand rate tariff
Some of the important types of tariff are as follows: • The flat demand rate tariff is express in the form, C= Ax.
where x = the number of lamps or load connected in kW
1. Flat demand rate tariff A = rate per lamp or per kW of connected load.
2. Simple tariff (Straight-line meter rate tariff)
• Electricity bill
3. Block meter rate tariff depends only on the maximum demand.
4. Two-part tariff independent of the energy consumed.
5. Power-factor tariff • The amount of connected load and hours of their use are known
and the rates of charges are made accordingly.
6. Seasonal rate tariff
7. Peak load tariff • Street lighting, sign lighting, signal system, and irrigation tube
wells.
8. Three-part tariff
• The metering equipment, meter reading, billing costs are
eliminated resulting decrease in total cost.
• It encourages the consumers to keep their appliances connected
to the supply mains even when not required.
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Simple tariff (Straight-line meter rate tariff) Block meter rate tariff
• This type of tariff is given by C=By • The energy consumption is divided into blocks and the price per unit is
where y = kWh of energy consumed, B = cost per kWh of energy fixed in each block.
• The bill depends only on the amount of energy consumed. • The price per unit in the first block is the highest and it decreases for the
• It encourages the consumers to disconnect the supply when not required. succeeding blocks.
• It charges at equal rates to different types of consumers irrespective of their • The first few units of energy at a certain rate, the next few at a slightly
load factor, diversity factor and power factor. lower rate and the remaining units at a still lower rate.
• Modifications in Simple tariff • Increases the LF of the system and the generation cost is reduced.
different types of consumers are charged at different rates. • Does not encourage energy conservation.
tariff for each type of consumption consider the LF and DV of the load.
• The energy crisis in the country has compelled to adopt the reverse form
• The domestic consumers is charged at higher rates as compared to power of this tariff.
consumers. (LF of light and fan load is low and the demand is during peak hours of the day.)
discourage to use more energy,
• Separate energy meters are to be installed for light and power loads. the first few kWh are charged at a certain rate, the next few at a
• Same rate irrespective of the magnitude of energy consumed. slightly higher rate, the next few at a still higher rate, and so on.
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Two-part tariff (Hopkinson Demand rate) Two-part tariff (Hopkinson Demand rate)
• In two-part tariff the total charge to be made from the consumer • The tariff charge made on maximum demand recovers the fixed
is split into two components. charges such as
1st comp : fixed charge dependent upon the maximum demand. Interest on the capital cost (e.g. building and equipment)
2nd comp: running charge dependent upon the energy consumed. depreciation on the capital cost
• This tariff can be expressed as taxes
insurance charges
operating cost (independent of energy but varies with maximum demand.)
where A = charge per kW of maximum demand
B = charge per kWh of energy consumed • The charge made on total energy consumption recovers the
operating cost, which varies with variation in energy supplied.
• The maximum demand can either be taken as
a certain fraction of the connected load or • The customer has to pay the fixed charge irrespective of the
measured by a maximum demand indicator (hourly or half consumption.
hourly or 15 min).
• This tariff is mostly applicable to medium industrial consumers.
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Power factor tariff Power factor tariff
• Plants must be operated at the most economical p.f. for utilizing kWh and kVArh tariff
equipment to the maximum capacity. Total charges = A1 (kWh) + B1 (kVArh)
• Power factor tariff helps in improving the power factor at plants. • Since kVArh decreases with the increase in p.f. this type of tariff
will induce the consumer to improve the p.f.
• The tariff in which power factor of the consumer’s load is taken
into consideration is called power factor tariff. Sliding scale or average power factor tariff
• An average p.f., say 0.8 lagging is taken as the reference.
kVA maximum demand tariff
• Maximum demand is measured in kVA instead of in kW.
• If the p.f. of the consumer is below this reference value, an
Total charges = A (kVA) + B (kWh)
additional charge is realized from the consumer for each step
• This is also a 2-part tariff. decrease of 0.01 below 0.8.
• Encourages the consumers to operate their machines at improved
p.f. because low p.f. will increases the kVA and will cause more • Similarly, if the p.f. is above this reference value, a discount is
demand charges. allowed to the consumer for each step rise of 0.01 above.
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Seasonal rate tariff Peak-load tariff
• The seasonal rate tariff specifies higher prices per kWh used • The energy can be supplied without incurring an additional capital
during the season of the year in which the system peak occurs cost and should prove very profitable.
(on-peak season).
• This type of tariff is very advantageous for certain processes such
• The prices per kWh are lower during the season of the year in
as
which the usage is lowest (off-peak season).
water heating by thermal storage,
Peak-load tariff pumping,
• The peak load tariff is similar to seasonal rate tariff. refrigeration etc.
• It specifies
higher prices per kWh used during the peak period of the day • The seasonal rate tariff and peak load tariff are both designed to
lower prices during the off-peak period of the day. reduce the systems peak load and therefore, reduces the system
idle standby capacity.
• During off-peak period, a large proportion of the generating and
distribution equipment will be lying idle.
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•
Three-part tariff Three-part tariff
Total charge is split into three elements, namely • Fixed charge recovers the cost of
fixed charge, expenses in giving a supply service connection
(incurred once only but charged for either by an annum sum or in each billing period)
semi-fixed charge
variable charge. office and service expenses including accounting, metering
and establishment charges.
The bill of the consumer is calculated as
• Semi-fixed charge recovers
the plant initial cost
the operating cost
where C = total charge for a certain period (say one month) (which is independent of total energy supplied but varies with maximum demand.)
x = maximum demand during the period (kw or kVA)
y = total energy consumed during the period (kWh) • Variable charge recovers the cost varying with the variation in
energy supplied such as on account of fuels etc.
A = cost per kW or per kVA of maximum demand
B = cost per kWh of energy consumed • The three-part tariff is generally applied to big consumers.
D = fixed charge during each billing period
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Tariff system in Nepal Tariff system in Nepal
Classification of consumers 4. Commercial consumer
1. Domestic consumer i. 230/400 V Commercial consumer
1.1 230 V, 5-60 A Single phase supply domestic consumer ii. 11 kV Commercial consumer
1.2 400 V, 1- 10 kVA Domestic consumer
1.3 400 V, 10-25 kVA Domestic consumer iii. 33 kV Commercial consumer
1.4 230/400 V 1-6 kW Commercial use Domestic consumer 5. Non-commerial consumer
(small shops, religious or social orgnaization, health clinics,
school, college, poultry, logde, hotel, restaurant) i. 230/400 V non-commercial consumer
ii. 11 kV Non-commercial consumer
2. Temple/Vihar/Moth/Gumba/Church/Masjid (energy used in iii. 33 kV Non-commercial consumer
religious activities)
6. Street light consumer
3. Industrial consumer i. Street light with metering
3.1 230/400 V Rural and cottage industry up to 20 kW. ii. Street light without metering
3.2 230/400 V Small industrial consumer
3.3 11 kV Industrial consumer 7 Irrigation consumer
3.4 33 kV industrial consumer
i. 230/400 V Irrigation consumer
3.5 66 kV & above voltage Industrial consumer
ii. 11 kV Irrigation consume
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Tariff system in Nepal Tariff system in Nepal
8. Water Supply Consumer
i. 230/400 V Community water supply
ii. 230/400 V Other Water supply Type of Tariffs used in Nepal
iii. 11 kV Community water supply
iv. 11 kV Other water supply
1. Flat energy rate tariff (life line tariff)
9. Transportation consumer
i. 11 kV Trolley bus consumer 2. Simple tariff (Straight-line meter rate tariff)
ii. 11 kV Other Transportation consumer 3. Block meter rate tariff
iii. 33 kV Trolly bus consumer
iv. 33 kV Other Transportation consumer 4. Two-part tariff
5. Power factor tariff : kVA maximum demand tariff
10. Temporary Consumer
230/400 V Temporary consumer 6. Peak-load tariff: time-of-day tariff
11 kV Temporary consumer
11. Community Wholesale consumer
230/400 V Community wholesale consumer
11 kV Community wholesale consumer
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Tariff system in Nepal Tariff system in Nepal
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Tariff system in Nepal Tariff system in Nepal
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