Tariff
Define Tariff What Factors are considered to decide Tariff ?
The rate of which consumer is hard for the good tariff. The rates for different types of consumers may be different, because those are decided after considering number of factors.
At the time of framing tan the following should be taken into account :
- Ability of the consumer to pay.
- Services rendered i.e. whether it is used for light and fan of agriculture etc.
- The annual cost of production consisting of fixed, semifixed and running charges.
- It should have simple method of calculating the bill.
(A) Need of framing the tariff :
- For generation of electricity, a plant is to be installed, building is to be errected, stuff is to be employed and we need fuel for running it.
- At the same time a huge amount is required for transmission and distribution of energy and period and maintenance staff is required.
- This causes a huge amount of expenditure per annum, which is to be recovered from the consumers top the plant running and also earn some profit for which electricity to be charged.
(B) Factors influencing the framing of tariff :
- A consumer is at liberty to use electricity as per his choice, he may use his maximum demand at any times want hence a plant has to make the provision of maximum demand of each consumer installed capacity. Hence, a tariff should be such that it will take M.D. of each consumer into account.
- Tariff should give importance to the pt of the consumer, because low pf will cause more loss of energy.
- Consumer uses electricity during off peak period, the diversity factor will increase, which increases load factor and cost of production, hence consumers should be promoted to use electricity during off peak loads.
- The load factor affect the cost of electricity because high load factor , reduces cost of generation.
- The purpose for which electricity is used, is having its influence on the tariff electricity may have high rate for light and fan in comparison to heating and cooking.
- Whether the supply is provided by H.T. connection or L.T. connection is having influence on tariff.
- The paying capacity also affects the tariff a commercial consumer using electricity for light and fan can may more than a domestic consumer using electricity for same purpose.
- The tariff should not increase number of metres for a consumer i.e. it should provide only one meter for all purposes.
- The financial conditions of the consumers should be taken into account i.e. the poor people using less electricity may be charged at low rates while the rich people using more electricity should be charged at high rate.
(C) Objectives of tariff :
- Cost of metering, billing, collection and miscellaneous services must be recorded.
- Cost of operation, supplies, maintenance and losses must be recovered.
- Recovery of capital investment is made.
- Cost recovered must be distributed amongst the consumer.
- Discourage users from drawing higher loads than contracted.
- Gain suitable profit on capital investments.
- It should have a provision of penalty for low power factor.
(D) Desirable characteristics of a tariff :
Following are the expected characteristics of a tariff :
- It should be very easy for calculations.
- Easy to understand by consumers.
- Tariff should be reasonable (not too high /too low)
- Different tariffs for different consumers like domestic consumers, commercial consumers, high tension consumers, factory consumers etc.
- In comparison with other sources of energy, the tariff for consumers be economical.
- Tariff during peak hours be higher but lower at offload and non-peak periods.
- Rate of energy charges be such that different types of consumers are satisfied.
- Tariff be divided into two parts : (i) Fixed charges, (ii) Running charges.
- For bulk consumers like industrial consumers in addition to basic tariff, in sensitive and penalty related tariff be framed.