Electricity Tariffs
Hari Mohan Dubey
Department of Electrical Engineering
Madhav Institute of Technology & Science, Gwalior
tariff is the methods of charging a
consumer for consuming electric power.
The tariff covers the total cost of
producing and supplying electric energy
plus a reasonable cost.
Advantages:
Simplest method
Easily understandable and easy to apply
Each consumer has to pay according to his utilization
Disadvantages
There is no discrimination according to the different types of
consumers.
The cost per unit is high.
There are no incentives (an attractive feature that makes the
consumers use more electricity.)
If a consumer does not consume any energy in a particular
month, the supplier cannot charge any money even though
the connection provided to the consumer has its own costs.
The actual tariffs that the customer pay depends on the
consumption of the electricity. The consumer bill varies
according to their requirements. The industrial consumers pay
more tariffs because they use more power for long times than
the domestic consumers. The electricity tariffs depends on the
following factors
Type of load
Time at which load is required.
The power factor of the load.
The amount of energy used.
The total bill of the consumer has three parts, namely, fixed
charge D, semi-fixed charge Ax and running charge By.
This is known as three-part electricity tariff, and it is mainly applied to the big
consumer.
Factors Affecting the Electricity Tariffs
The following factors are taken into accounts to decide the
electricity tariff:
Types of Load – The load is mainly classified into three types, i.e.,
domestic, commercial, or industrial. The industrial consumers use
more energy for a longer time than domestic consumers, and hence
the tariff for the industrial consumers is more than the domestic
consumers. The tariff of the electric energy varies according to their
requirement.
Maximum demand – The cost of the electrical energy supplied by a
generating station depends on the installed capacity of the plant
and kWh generated. Increased in maximum capacity increased the
installed capacity of the generating station.
The time at which load is required – The time at which the maximum
load required is also essential for the electricity tariff. If the maximum
demand coincides with the maximum demand of the consumer, then
the additional plant is required. And if the maximum demand of the
consumers occurs during off-peak hours, the load factor is improved,
and no extra plant capacity is needed. Thus, the overall cost per kWh
generated is reduced.
The power factor of the load – The power factor plays a major role in
the plant economics. The low power factor increases the load current
which increases the losses in the system. Thus, the regulation becomes
poor. For improving the power factor, the power factor correction
equipment is installed at the generating station. Thus, the cost of the
generation increases.
The amount of energy used – The cost of electrical energy is reduced by
using large amounts of energy for longer periods.
Types of Electricity Tariff
Some of the most important types of tariff are as follows:
Flat Demand Rate tariff
Straight-line Meter rate tariff
Block meter Rate tariff
Two-part tariff
Power factor tariff
Seasonal rate tariff
Peak load tariff
Three-part tariff
The different types of tariffs are explained below in details
1. 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 unknown. The metering system is not used for calculating such
type of tariffs.
Types of tariffs Cont…
2. Straight-line meter rate tariff – This type of tariff is given by
the equation C = B*y.
The generation of the bills depends on the energy
consumption of the load. Thus, different types of bills are
generated by the 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
Types of tariffs Cont…
3. 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.
Types of tariffs Cont…
4. 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.
The factor A and B may be constant and vary according to some
sliding.
Types of tariffs Cont…
5. 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.
5a. kVA maximum demand tariff – This is also a two-part tariff.
The low power factor increases the KVA rating of the load.
5b. kWh and kVarh tariff – The bill is calculated by the sum of the
kVarh and Kwh rating of the load
The kVarh is inversely proportional to the power factor of the load.
5c. 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.
Types of tariffs Cont…
6. 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.
7. Peak-load tariff – Such type of tariff is similar to peak load 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.
The peak load and seasonal tariffs both are used for reducing the idle or standby
capacity of the load.
8. Three-part tariff – The three-part tariff is in the form of,
and it is applied to the big consumer.
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