The document discusses electricity tariffs, which are the rates at which electrical energy is sold to consumers. Tariffs are designed to recover the costs of production, transmission, distribution, operation and maintenance, as well as generate a reasonable profit. Tariffs are classified based on how the rate per unit of energy is determined. Common tariff types include simple/uniform rate tariffs with a fixed rate per unit, block rate tariffs with decreasing rates in higher consumption blocks, two-part tariffs based on maximum demand and units consumed, and power factor tariffs that consider the consumer's power factor. The objective of tariffs is to fully recover costs, provide proper returns, be fair, attractive and simple for consumers to understand.

1. Tariff and
it’s
component
Presented By
TAPABRATA DAS
ROLL-35001619033

2. WHAT IS TARIFF?
• The electricity tariff is defined as the rate at which the electrical energy is sold to a
consumer. However, the tariff should include the total cost of producing and supplying
electrical energy plus the profit to the power company. In practice, the tariff cannot be
same for all types of consumers because the cost of production of electrical energy
depends upon the magnitude of electrical energy consumed by the user and his load
conditions. Therefore, the tariff is fixed by considering the different types of consumers
such as domestic, industrial and commercial, etc.

3. Objective
of Tariff
Like any other product, the electrical energy is also sold at such a rate so that
it not only returns cost of production and transmission but also earns
reasonable profit. Hence, a tariff should include the following factors −
It should recover the cost of production of electrical energy at the power
station.
It should recover the cost on the investment in transmission and distribution
of electrical energy.
It should recover the cost of operation and maintenance of elements of
power system such as meters, equipment, bills, etc.
It should also generate a profit on the investment.

4. Characteristics
of Tariff
• Proper Return - The tariff should be such that the total receipts from
the consumers must be equal to the cost of producing and supplying
electrical energy plus reasonable profit. Therefore, the tariff should
be such that it ensures the proper return from each consumer so
that each power supply company can ensure the continuous and
reliable service to the consumers.
• Simplicity - The tariff should be simple so that it can easily be
understood by an ordinary consumer.
• Fairness - The tariff should be fair so that different types of
consumers are satisfied with the rate of charge of electrical energy.
Therefore, a big consumer should be charged at a lower rate than a
small consumer because the increased energy consumption spreads
the fixed charges over a greater number of units, which reduces the
overall cost of production of electrical energy. Similarly, the
consumers whose load conditions are non-variable should be
charged at lower rate than the consumers whose load conditions
change considerably from the ideal.
• Attractive - The tariff should be attractive so that a large number of
consumers are encouraged to utilise the electrical energy.
• Reasonable Profit - The tariff should be such that it also earns a
reasonable profit.

5. Types of Tariff

6. When there is a fixed rate per unit of
energy consumed, it is known as simple
tariff or uniform rate tariff. In case of
simple tariff, the price charged per unit is
constant i.e. it does not change with
increase or decrease in number of units
consumed.

7. • When different types of consumers are
charged at different uniform per unit
rates, it is known as flat rate tariff. In case
of flat rate tariffs, the consumers are
grouped into different classes and each
class of consumers is charged at a
different uniform rate

8. Block Rate Tariff
• In the block rate tariffs, a given block of
energy is charged at a specified rate and
the succeeding blocks of energy are
charged at progressively reduced rates. In
this tariff, the energy consumption is
divided into blocks and rate per unit is
fixed in each block. The price in the first
block is highest and progressively
decreases in succeeding blocks.

9. Two Part Tariff
• When the rate of electrical energy
consumption is charged based on
maximum demand of the consumer and
the units consumed, is known as two-part
tariff. In case of two-part tariff, the total
charges are spilt into two components
viz. fixed charges and running charges.
The fixed charges depend upon the
maximum demand of the consumer
whereas the running charges depend
upon number of units consumed.

10. Maximum Demand
Tarif
• The maximum demand tariff is same as
the two-part tariff, the only difference is a
maximum demand meter being installed
in the consumer’s premises. The
maximum demand tariff is mostly applied
to big consumer.

11. Power
Factor Tariff
When the rate of electrical energy is decided by considering the
consumer’s load power factor, is called as power factor tariff. The
power factor tariffs are also classified into three types as −
• kVA Maximum Demand Tariff – In case of this tariff, the fixed
charges are made based on maximum demand in kVA instead
of kW. Since kVA is inversely proportional to power factor,
thus a consumer having low power factor has to pay more as
fixed charges.
• Sliding Scale Tariff – In this case, an average power factor is
taken as reference (say 0.75 lagging). If the power factor of
the consumer is less than this, then additional charges are
made. On the other hand, if the power factor is above the
reference value, a discount is allowed to the consumers.
• kW and kVAR Tariff – In this tariff, both active power (kW)
and reactive power (kVAR) supplied are charged separately. A
consumer having low power factor draws more reactive
power, thus have to pay more charges.

12. Three Part Tariff
The tariff is said to be three-part
tariff, when the total charges are
split into three parts viz. fixed
charges, semi-fixed
charges and running charges. This
type of tariff is generally applied
to big consumers. If ‘a’ is the fixed
charges, ‘b’ is semi-fixed charges
and ‘c’ is running charges, then the
three-part tariff can also be
represented by the equation as:

13. THANK YOU