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Tarif

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CONTENTS

1. Tarif
2. Desirable Characteristics
of a Tarif
3. Types of Tarif

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Introduction
The supply company has to ensure
that the tariff is such that
It recovers the total cost of
producing electrical energy
Also earns profit on the capital
investment

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Tarif
The rate at which electrical energy is
supplied to a consumer.

Objectives of tarif:

1. Recovery of cost of producing electrical energy at the


power station.
2. Recovery of cost on the capital investment in
transmission and distribution systems.
3. Recovery of cost of operation and maintenance of
supply of electrical energy e.g., metering equipment,
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Desirable Characteristics of a Tarif

A tariff must have the following desirable


characteristics:
. Proper return
:
The
tariff should be such that it ensures
the proper return from each consumer.

This will enable the supply company to


ensure continuous and reliable service to
the consumers.
2. Fairness : The tariff must be fair so that
different types of consumers are
satisfied with the rate of charge of
electrical energy.
A consumer whose load conditions do
not deviate much from the ideal should
be charged at a lower rate than the one
whose load conditions change
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appreciably from the ideal.

3. Simplicity :

Ordinary consumer can easily


understand it
A complicated tariff may cause an
opposition from the public

. Reasonable profit
: electric supply company
An
generally enjoys the benefits of
monopoly.
Therefore, the investment is
relatively safe due to non-competition
in the market.
profit to be restricted to 8% or so
per annum.

5. Attractive : Efforts should be made to fix the


tariff in such a way so that consumers
can pay easily.
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Types of Tarif
The following are the commonly used types of tariff :

1. Simple tarif /uniform rate tarif


2. Flat rate tarif
3. Block rate tarif
4. Two-part tarif
5. Maximum demand tarif
6. Power factor tarif
7. Three-part tarif
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http://iesco.com.pk/index.php/custom
er-services/tariff-guide
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Simple tarif /Uniform rate tarif


When there is a fixed rate per unit of energy
consumed
This is the simplest of all tariffs and is readily
understood by the consumers.

Disadvantages:
1. There is no discrimination between different
types of consumers since every consumer has to
pay fixed charges.
2. The cost per unit delivered is high.
3. It does not encourage the use of
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electricity.

. Flat rate tarif


When different types of consumers are charged at
different uniform per unit rates
Consumers are grouped into diferent classes
and each class of consumers is charged at a
different uniform rate.
Group 1: Lighting load different uniform rate and
separate meter
Group 2: Power load different uniform rate and
separate meter
Disadvantages:
1. Expensive and complicated as separate meters
are required.
2. A particular class of consumers is charged at
the same rate irrespective of the magnitude of
energy consumed.
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. Block rate tarif


When a given block of energy is charged at a
specified rate and the
next blocks of energy are charged at progressively
reduced
Energyrates.
consumption is divided into blocks and the
price per unit is fixed in each block.
First block :
Price per unit is the highest
Succeeding blocks :Price per unit is progressively
reduced
Example:
First 30 units may be charged at the rate of 60 paise
per unit
Next 25 units at the rate of 55 paise per unit
Remaining additional units may be charged at the
rate of 30 paise per unit
Used
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4. Two-part tarif
When the rate of electrical energy is charged on the
basis of maximum demand of the consumer and the
units consumed
Total charge is split into two components
1. Fixed charges
2. Running charges
Fixed charges

Depend upon the maximum demand of


the
consumer
Running charges Depend upon the number of units
consumed by the consumer
Total charges = Rs (b kW + c kWh)
b = charge per kW of maximum demand c = charge per
kWh of energy consumed
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Mostly applicable to industrial consumers11

Maximum demand tarif


Similar to two-part tarif with the only
diference that the
maximum demand is actually measured by installing
maximum demand meter in the premises of the
This type of tariff is mostly applied to big
consumer.
consumers.
Not suitable for a small consumer as a separate
maximum demand meter is required

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Power factor tarif


The tariff in which power factor of the consumers
load is taken into consideration
Low power factor increases the rating of station
equipment and line losses
Consumer having low power factor must be
penalised.

The following are the important types of power


factor
tariff :
1. kVA
maximum
demand tarif
2. Sliding scale tarif
3. kW and kVAR tarif
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. Three-part tarif
When the total charge to be made from the
consumer is split into three parts viz., fixed
charge, semi-fixed charge and running charge

Total charge = Rs (a + b kW + c kWh)


a = fixed charge made during each billing period.
It includes interest and depreciation on the
cost of secondary distribution and labour cost
of collecting revenues
b = charge per kW of maximum demand,
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c
= charge per kWh of energy consumed

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Real Time Pricing (RTP):


RTP is generally an hourly rate which applies to usage on an hourly
basis

Inclining Block Rates (IBR):


IBR divides the electricity price into several steps or blocks
The first block of electricity is at the lowest price

Critical Peak Pricing (CPP):


Very high critical peak prices (i.e., 3-10 times) are assessed for
certain hours on event days (often limited to 10-15 per year)
Typically combined with a TOU rate, but not always

Time-Of-Use Pricing (TOU):


Different prices for different times

[6] Ameren Illinois Power Rate Zone 1. Effective June 1, 2008 [Online]. Available:
https://www2.ameren.com/RetailEnergy/RealTimePrices.aspx.

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THANK
YOU
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