The rate at which electrical energy is
supplied to a consumer
 Therefore tariff naturally becomes
attention inviting for electric supply
 The supply company has to ensure that
the tariff is such that it not only recovers
the total production cost of electricity but
also earns profit on the capital
The tariff cannot be the same for all
consumers as the cost of producing e’
power depends considerably on the e’
energy consumed by the user & his load
 Therefore due consideration has to be
given to different types of consumers
 (i.e. .)industrial, domestic and
 While fixing tariff.
Objectives of tariff
Recovery of cost of production
 Recovery on the capital investment on pp
 Recovery on the capital investment on
TXN & DXN s/m
 Recovery of cost of operation and
maintenance of equipments like enery
meter ,billing equipments etc.
 Earn a suitable profit on capital
Desirable characteristics of a tariff
Proper return – this will ensure continuous
& reliable service to the consumers
 fairness – tariff must be fair so that
different types of consumers are satisfied
with the rate
 Simplicity – must be simple so that an
ordinary consumer can easily understand
Reasonable profit – profit element should
be reasonable
 Attractive – it should be attractive so that
large number of consumers are
encouraged to use e’ energy
Types of tariff
Simple tariff
 Flat rate tariff
 Block rate tariff
 Two part tariff
 Max. demand tariff
 Power factor - 1)kVA max. demand tariff
2)sliding scale tariff
3)kW and kVAR tariff
Simple tariff
Here there is a fixed rate per unit of
energy consumed.i.e. price charged per
unit is constant.
 The rate will not vary with decrease or
increase of no of units consumed
 The consumption is recorded by Energy
 This is the simplest of all tariffs and is
readily understood by the consumers
There is no discrimination between
different types of consumers
 The cost per unit delivered ius high
 It does not encourage the use of
2. Flat rate tariff
Here different types of consumers are
charged at different uniform per unit
 The consumers are grouped into different
classes and each class is charged at
different uniform rates.
 For example the flat rate /kWhr for
lighting load may be 60paise, whereas it
may be 55paise/kWhr for power loads
Simple in calculations
 More fair to different types of consumers
Separate meters are required for lighting
loads, power loads etc. this makes the
tariff expensive and complicated.
 A particular class of consumers are always
charged at the same rate irrespective of
the magnitude of energy used.
Block rate tariff
When a given block of energy is charged
at a specified rate and the succeeding
blocks of energy are charged at
progressively reduced rates , it is called
block rate tariff
 Here the energy consumption is divided
into blocks and the price per unit is fixed
in each block.
The price p.u. of the 1st block is the
highest and it is progressively reduced for
the succeeding blocks of energy.
 (e.g.)for 1st 30units may be charged
@60paise p.u. and next 25 units @55
paise p.u. remaining additional block @30
Two part tariff
When the rate of electricity is charged on
the basis of max. demand of the
consumer &the unit consumed ,it is called
2 part tariff.
 Here the total charge is split into 2
components 1)fixed charges 2) running
Total charges
Fixed charge
 Depends on max.
 It is assessed from the
total connected load
 It is in kW
Running charge
 Depends on the no of
units consumed
 It is in kWhr
Total charge
Rs (b * kW + c * kWhr)
Where b - charge/kW of max.
C – charge/ kWhr of energy
Easily understood
 It recovers fixed charge which depends on
max. demand, but are independent of
units consumed
The consumer has to pay fixed charges
irrespective of the fact whether he has
consumed energy or not.
 There is always error in assessing the
max. demand of the consumer .
Max. demand tariff
It is similar to 2 part tariff with the only
difference that max. demand is actually
measured by installing max. demand
meter in the premises of the consumer .
 This removes the objection of 2 part tariff
where max. demand is assessed on the
basis of total connected load.
This tariff is mostly applied to big
consumers. However it is not suitable fo
small consumers as a separate max.
demand meter is required
Power factor tariff
Here the power factor of the consumer is
taken into account.
 P. f. plays an important role in ac systems
 A low p f results in so many
disadvantages like v drop, loss etc
 Therefore a consumer having low p f
should be penalized.
Types of power factor tariffs
kVA max. demand tariff
It is a modified form of 2 part Tariff
Here fixed charge is in kVA not kW as kVA is
inversly proportional to pf(pf = kW/kVA).
Therefore a consumer having lpf has to
contribute more towards fixed charges
This tariff encourages the consumer to
operate their equipments at improved pf.
Sliding scale p.f. tariff
Also called average pf tariff.
Here average pf , say 0.8 lagging is taken as
If pf of the consumer falls below this pf
suitabe charges are made.
If pf is above this reference a discount is
kW and kVAR Tariff
Here both active and reactive power
supplied are charged separately.
A consumer having lpf will draw more
reactive power and hence shall have to
pay more.

similar documents