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What is Tariff
The supplying company fixes the rate of electrical energy provided to the consumers. This is called tariff or tariff rate. Tariff means the fee charged by the supplying company for recovery of electrical energy expenditure.
The following points are kept in mind for fixing the tariff
(i) Type of Load (Domestic Load, Commercial Load, Industrial Load)
(ii) Maximum demand
(iii) the time (day or night) when the load is required
(iv) power factor of the load
(v) Total consumption of energy
Tariffs are not fixed at the same rate for all types of consumers. The cost of production, energy distribution and profit are taken into account in determining the tariff. It is also taken care of by the energy supply company that what is the economic level of the consumers, for example, Electricity is sold to industrial areas at a higher rate than agriculture because the owners of factories can spend more than the farmers.
Types of Tariff
Generally, the following tariff types are used in the plan-
1. Simple Tariff
According to this tariff, the energy cost is decided based on the usage of energy units.
In this type of tariff, the price charge per unit remains fixed. The electric energy consumed by the consumer can be found through the energy meter.
Disadvantages of Simple Tariff
(i) In this tariff, all consumers are considered equal, such as Electricity is supplied to domestic, industrial and commercial types of consumers at the same rate.
(ii) The energy cost per unit in this tariff plan is quite high.
(iii) It does not encourage the use of Electricity in this tariff.
2. Flat Rate Tariff
This In tariff plans, different types of consumers are charged energy prices at different rates. For example, the rate is different for light load and power load. The energy rate for each type of consumer is fixed, considering the consumer’s diversity and load factors.
If a consumer spends x units of electrical energy and the energy expenditure rate is Rs.y per unit, then the total expenditure of the consumer will be Rs.xy. The flat-rate tariffs are represented as
C= AX
Hence the bill will depend on the maximum demand commensurate with the quantum of energy consumption.
Disadvantages of Flat Rate Tariff
(i) It requires the installation of different meters for different loads, due to which such tariffs are expensive and complex.
(ii) Some main consumers are charged according to their energy consumption rate, while the per-unit fixed tariff for large consumers is reduced. Hence the charge from large consumers is less than other consumers Goes.
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3. Straight Meter Rate
The following equation can represent the straight meter rate tariff
C = By
In this type of tariff, the duty rate depends on the unit used. This tariff is sometimes used for domestic and commercial consumers as well.
Disadvantages of Straight Meter Rate
(i) It does not encourage the use of Electricity in this tariff.
(ii) In this tariff, even if the consumer does not use Electricity, he must deposit a certain fee.
4. Block Rate Tariff
In this tariff system, the energy consumption is divided into blocks, and the energy rate per unit is fixed for each block. In this tariff, special care is taken that if more energy units are spent in this, then the load factor increases and the energy generation expenditure per unit decreases, so the consumers who demand more energy units, they Electricity is given at a cheaper rate. In contrast, for those whose energy consumption is less, electrical energy is given at a higher rate. In this tariff, the energy used is made up of blocks. Energy for the first block is given at an expensive rate and then in the next block at a decreasing rate.
For example, the first 500 units will be charged at Rs 1.50 per unit, the second 1000 units at the rate of Re 1 per unit and the remaining units at the rate of 75 paise per unit.
Disadvantage of Block Rate Tariff
This tariff is not useful in a situation where consumer demand is likely to exceed its peak demand. In this situation, the supply company will have to increase the last block of energy expenditure rate rather than reduce it so that the consumer can limit its peak demand. And there should be no possibility of overloading the generating plant beyond its capacity.
5. Hopkinson Demand Rate
This tariff is also called a two-part tariff. Hopkinson first stated this tariff. The following equation represents it.
C = Ax+By
In this plan, the entire energy expenditure is divided into two parts.
(i) Fixed Charge
(ii) Running Charge
(i) Fixed expenditure depends on maximum kW demand.
(ii) Current expenditure is based on energy consumption.
This tariff is displayed as follows.
Y=Rs(bxkW+cx kWh)
Here b = duty per kW on maximum demand
and c = duty per kWh on energy consumption
This tariff is usually for consumers having medium industrial units. It is generally not used for domestic consumers. The consumer will always have to pay the fixed cost based on the maximum kW even if his energy expenditure is zero.
6. Doherty Demand Rate Tariff
In this tariff, the total energy expenditure is divided into three parts.
(i) Fixed charge
(ii) Semi-fixed charge
(iii) Variable charge
This tariff is displayed as follows
Y = Rs (a + bx kW + cx kWh)
Here a = Fixed charge
b = duty per kW on peak demand
C = duty per kWh on energy consumption
C = Ax +By+D
Monthly electricity expenditure = ?
Monthly energy expenditure = 100kWx 0.5 x 24 = 1200 kWh
Fixed charge=₹600
Demand charge per month = 70 x 60 = ₹ 4200
Energy charge per month = 1200 x 10 = ₹ 12000
Monthly electricity expenditure = (₹600 + ₹4200 + ₹12000) = ₹16800
7. Maximum Demand Indication
This tariff is similar to the Hopkinson demand rate or two-part tariff. The only difference between them is that the Maximum Demand Indication is used to measure the maximum demand of the consumer, and its kW demand expenditure is determined based on the measured maximum kW demand.
8. Power Factor Tariff
The efficiency of any plant depends on its power factor. Therefore, to increase the utility of the plant and the plants, the plant should be run at the most economical power factor. To achieve this objective, it is necessary to punish the consumers with low power factors by giving energy at expensive rates so that the power factor is high.
The following power multiplier tariffs enable the consumer to take electrical energy at a higher power factor.
9. Wright Demand Rate
In this tariff system, the consumer is encouraged to make use of the maximum demand. Rates are reduced on maximum demand and energy consumption. The use of this system increases the load factor.
10. Off-Peak tariff
It is the endeavour of any supply company that the peak load of all the consumers does not come together but is evenly distributed throughout the day (in 24 hours) so that the capacity of the generating plant can be fully utilized. When all the peak loads do not come together symmetrically at different times, there is an increase in the Xanthus factor, due to which the consumer gets energy at a cheaper rate. Still, if the consumer’s demand is not uniform but is very high at any one time of the day and becomes too low at any other time, the value of the Xanthus multiplier will decrease, resulting in higher energy rates.
This tariff can be effectively used for refrigeration, pumping and heating works.
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