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Tariff

ELECTRICAL DISTRIBUTION III (Tshwane University of Technology)

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ELECTRICAL DISTRIBUTION III

(ELD331T)

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Chapter 5: Tariff

by

Chaise Khumalo

Department of Electrical Engineering

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Overview:

• Tariff

• Desirable Characteristics of a Tariff

• Types of Tariff

Economics of Power Generation

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Introduction:

• Electric power is used when supplied at

reasonable rate.

• Ensure that the tariff recovers the total cost of

producing electrical energy.

• Also earns profit on the capital investment.

• Various types of tariffs (advantages &

disadvantages)

Introduction

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Tariff:

• The rate at which electrical energy is supplied to a

consumer.

• Tariff should include;

Total cost of producing & supplying electrical energy plus

profit.

• Not the same for all types of consumers.

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Tariff (Cont.):

• Special consideration has to be given to different types of

consumers while fixing the tariff.

• The problem of suitable rate making is highly

complicated.

• Objectives of tariff;

returns the cost & also earns reasonable profit

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Tariff (Cont.):

• A tariff should include the following items:

a) Recovery of cost of producing electrical energy at the P.S

b) Recovery of cost on the capital investment in

transmission & distribution systems

c) Recovery of cost of operation & maintenance of supply of

electrical energy

d) A suitable profit on the capital investment

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Desirable Characteristics
of a Tariff:
• A tariff must have the following desirable
characteristics;
a) Proper return

b) Fairness

c) Simplicity

d) Reasonable profit

e) Attractive

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Types of Tariff:
• The following are the commonly used types of tariff;

a) Simple tariff = when there is a fixed rate per unit of

energy consumed (uniform rate tariff).

• Price charged per unit is constant

• It does not vary with the increase or decrease in number

of units consumed.

• Energy meter records the consumption at the consumer’s

terminals

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Simple Tariff (Cont.):

• Disadvantages:

a) No discrimination between different types of consumers

– everyone pays equally.

b) The cost per unit delivered is high

a) It does not encourage the use of electricity

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Types of tariff (Cont.):

b) Flat rate tariff = when different types of consumers are

charged at different uniform per unit rates.

• Consumers are grouped into different classes.

• Each class of consumers in charged at a different uniform

rate.

• Diversity & load factors are taken into account when

different classes are made.

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Flat Rate (Cont.):

• It is fair to different types of consumers & is quite simple
in calculation.

• Disadvantages:

a) Separate meters are required – application is expensive

& complicated.

b) A particular class of consumers is charged at the same

rate irrespective of the magnitude of energy consumed.

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Types of Tariff (Cont.):

c) Block rate tariff = when the given block of energy is

charged at a specified rate & the succeeding blocks of
energy are charged at progressively reduced rates.

• Energy consumption is divided into blocks.

• The price per unit is fixed in each block.

• The price per unit in the first block is the highest.

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Block Rate Tariff (Cont.):

• The per unit price is progressively reduced for the

succeeding block of energy.

• The consumer gets an incentive to consume more

electrical energy.

• It lacks a measure of the consumer’s demand

• Is used for majority of residential & small commercial

consumers.

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Types of Tariff (Cont.):

d) Two-part tariff = when the rate of electrical energy is

charged on the basis of maximum demand of the
consumer & the units consumed.

• The total charge is spit into two components;

Fixed charges.

Running charges

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Two-part Tariff (Cont.):

• Fixed charges depend upon the maximum demand

• Running charges depend upon the number of units

consumed.

• A consumer is charged at a certain amount per kW of

max. demand plus certain amount per kWh of energy
consumed.

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Two-part Tariff (Cont.):

• It is applicable to industrial consumers with appreciable

max. demand.

• Advantages:

a) It is easy understood by the consumers

a) It recovers the fixed charges which depend upon max.

demand

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Two-part Tariff (Cont.):

• Disadvantages:

a) The consumer has to pay the fixed charges irrespective

of whether he/she has consumed electrical energy.

b) The is always an error in assessing the max. demand of

the consumer.

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Types of Tariff (Cont.):

e) Maximum demand tariff

• Similar to two-part tariff

• The only difference is that max. demand is measured by

installing max. demand meter in the premises of the
consumer.

• Mostly applied to big consumers.

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Types of Tariff (Cont.):

f) Power factor tariff = the tariff in which power factor of

the consumer’s load in taken into consideration.

• Low p.f increases the rating of station equipment & line

losses.

• A consumer having low p.f is penalized.

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Power Factor Tariff

• Types of power factor tariff:

a) kVA max. demand tariff

• Fixed charges are made on the basis of max. demand in

kVA & not in kW.

• Consumers with low p.f contributes more towards fixed

charges. kVA is inversely proportional to the p.f

• It encourages consumers to operate their appliances and

machinery at improved p.f.

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Power Factor Tariff

(Cont.):

b) Sliding scale tariff (average power factor tariff)

• Average p.f is taken as reference

• Additional charges are made if the consumers p.f is below

the reference.

• If the p.f is above the reference, a discount is allowed to

the consumer.

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Power Factor Tariff

(Cont.):

c) kW & kVAr tariff

• Both active power (kW) & reactive power (kVAr) supplied

are charged separately.

• A consumer with low p.f draws more reactive power & pay
more charges.

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Types of Tariff (Cont.):

g) Three-part tariff = when the total charge to be made

from the consumer is split into three parts. viz,

Fixed charge

Semi-fixed charge

Running charge.

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Example:
The monthly readings of a consumer’s meter are as follows:

Maximum demand = 50 kW
Energy consumed = 36.000 kWh
Reactive energy = 23.400kVAr

If the tariff is R80 per kW of maximum demand plus 8 cents

per unit plus 0.5 cents per unit for each 1% of power factor
below 86%, calculate the monthly bill of the consumer.

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Solution:

Average load = 36000 = 50 kW

24x30

Average reactive power = 23400 = 32.5 kVAr

24x30

Suppose ɸ is the power factor angle:

tan ɸ = kVAr / Active power = 32.5 / 50 = 0.65

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Solution (Cont.):

ɸ = arc tan 0.65 = 33.02°

Power factor = cos ɸ = cos 33.02 = 0.8384

Power factor per charge = R 36000 x 0.5 (86 – 83.84)

100
= R388.8

Monthly bill = R(80 x 50 + 0.08 x 36000 + 388.8)

= R7268.8

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THANK YOU!!!

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