07EEE - 2023 - Tariff Structure
07EEE - 2023 - Tariff Structure
Power
Renewable
Generation Conventional
Energy Based
Methods
Simple Power
Flat rate Block Two-part Three-
tariff factor
tariff rate tariff tariff part tariff
tariff
kVA kW and
maximum Sliding
scale kVAR
demand tariff
tariff tariff
19-04-2023
Simple tariff
7
Disadvantages
There is no discrimination between different types of consumers since
every consumer has to pay equitably for the fixed charges.
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. 19-04-2023
Flat rate tariff
9
Disadvantages
Separate meters are required for lighting load, power load etc. This makes the
application of such a tariff expensive and complicated.
All the consumers in a particular “category” are charged at the same rate
irrespective of the magnitude of energy consumed. However, it is fairer if the
consumers that utilize more energy be charged at lower fixed rates.
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.
19-04-2023
Block rate tariff
11
A given block of energy is charged at a
specified rate and the succeeding blocks of
energy are charged at progressively reduced
rates.
the energy consumption is divided into blocks
and the price per unit is fixed in each block.
For example, the first 30 units may be charged
at the rate of 60 paise per unit, the next 25
units at the rate of 55 paise per unit and the
remaining additional units may be charged at
19-04-2023
the rate of 30 paise per unit.
12 Block rate tariff
Advantage
the consumer gets an incentive to consume more electrical energy
This increases the load factor of the system and hence the cost of
generation is reduced.
Disadvantage
It lacks a measure of the consumer’s maximum demand (applicable for
previous tariffs also).
If a consumer does not consume any energy in a particular month, the
supplier does not charge any money even though the connection provided
to the consumer has its own costs.
19-04-2023
13 Two-part tariff
In two-part tariff, the total charge to be made from the consumer
is split into two components
19-04-2023
15 Two-part tariff
Advantages
If a consumer does not consume any energy in a particular month,
the supplier will get the return equal to the fixed charges.
Disadvantages
Even if a consumer does not use any electricity, he has to pay the
fixed charges regularly.
The maximum demand of the consumer is not determined. Hence,
there is error of assessment of max demand and hence conflict
between the supplier and the consumer. Else maximum demand
meter at the consumer premise need to be there
19-04-2023
16 Three-part tariff
Total cost is divided into 3 sections:
A = fixed charges
B = charge per kW of max demand
B is a constant which when multiplied with max demand (kW)
gives the semi fixed costs.
C = charge per kWh of energy consumed
C is a constant which when multiplied with units consumed (kWh),
gives total running charges. 19-04-2023
17
Power Factor Tariff
19-04-2023
18 (1) kVA Maximum demand tariff
In this type of tariff, the fixed charges are made on the basis of maximum
demand in kVA instead of kW.
power factor = kW / kVA
Hence, a consumer having low power factor load will have to pay more
fixed charges.
This gives the incentive to the consumers to operate their load at high
power factor. 19-04-2023
19 (II) kW And kVAR tariff
19-04-2023
20
(III) Sliding scale tariff
if the power factor of the consumer’s loads is lower than the reference, he
is penalized accordingly.
Hence, a consumer having low power factor load will have to pay more
fixed charges.
There are two tariff systems, one which the consumer pays to the
DISCOMS (eg. All previously discussed tariff structurs) and the
other one which the DISCOMS pay to the generating stations.
ABT is the tariff system existent in India for the DISCOMS and
was introduced in the year of 2002. Central Electricity
Regulatory Commission (CERC) regulates this.
22
Availability Based Tariff (ABT)
If power demand is more than the power supply then the Grid
frequency will be less than 50 Hz. If demand is less than generation, then
grid frequency will be more than 50 Hz
During peak load hours, Generating Stations should supply more power to
meet the demand and during off peak hours, Generating Stations should
reduce their generation to maintain the supply-demand balance, thereby
maintaining grid frequency at 50 Hz.
But the existing tariff scheme does not encourage Generating Stations to
back down their generation during off-load hours since as per the existing
tariff scheme Generating Stations get paid for the power supplied.
Need of Availability Based Tariff
This necessitates a new pricing scheme which encourages Generating
Stations to reduce generation during off load hours by providing incentive.
This is why Availability Based Tariff (ABT) was introduced. Thus the new
pricing scheme helps to maintain the Grid discipline and stability.
26 Availability Based Tariff
• Fixed Cost
Capacity • Linked to Plants Capacity to supply MWs
• Depends on the Availability of the Plant
Charge
• Variable cost
Energy • Fuel cost for Scheduled Generation
• Operating Expenses
Charge
19-04-2023
29 UI Charge
This encourages to supply excess power into the Grid by the stations
so that Grid frequency do not decrease further.
Let us say the Grid frequency at that time is 49.4 Hz. In this case, a
UI charge at a higher rate is paid to the station.
19-04-2023