Types of Tariff in the Power System

The tariff is the rate at which the electrical energy is sold. There are various types of tariffs followed
in the market.

Tariff – Introduction:

Electrical energy produced by the power system is delivered to a large no customers. The tariff
becomes the attention for the electric supply company. The company has to ensured that the tariff
such that it not only recovers total cost of producing electrical energy but also earns profit on the
capital investment.

Tariff types:

1. Simple tariff

2. Flat rate tariff

3. Block rate tariff

4. Two part tariff

5. Maximum demand tariff

6. power factor tariff

7. Three part tariff

Simple Tariff:

Definition: When there is a fixed rate per unit of energy consumed, it is known as simple tariff
(Uniform Rate Tariff).

 This is the most simplest of all tariff.

 In this type, the price charged per unit is constant.

 It means, the price will not vary with increase or decrease in number of units used.

Disadvantages:

 The cost per unit delivered is high.

 There is no discrimination among various types of consumers.

Flat Rate Tariff:

Definition: When different types of consumers are charged at different uniform per unit rates, it is
said to be Flat rate Tariff.

 In this type, the consumers are grouped into different classes.

 Each class is charged at different uniform rate.

 the different classes of consumers may be taken into account of their diversity and load
factors.
  Since this type of tariff varies according to the way of supply used, separate meters are
required for lighting load, power load etc.

Block rate tariff:

When a given block of energy is charged at a specified rate and the succeeding blocks of energy are
charged at progressively reduced rates is called as block rate tariff.

 In this type, the energy consumption is divided into many blocks and price per unit is fixed in
each block.

Two Part tariff:

When the rate of electrical energy is charged on the basis of maximum demand of the consumer and
the units consumed it is called two-part tariff.

 In this type, the total charge to be made from the consumer is split into two components.

 ie, fixed charges and running charges.

 The fixed charges depend upon the number of units consumed by the customer. Thus the
consumer is charged at a certain amount per kW of maximum demand + a certain amount
per kWh of energy consumed.

 Total charges = Rs (X x kW + Y x kWh)

 It is easily understood by the consumer.

 It recovers fixed charges which depend upon the maximum demand of the consumer
independent of the units consumed.

Disadvantages

 Consumer has to pay the fixed charges irrespective of the fact whether he has consumed or
not the electrical energy.

 There is always error in assessing the maximum demand of the consumer.

Maximum demand tariff:

It is similar to two-part tariff. The only difference is the maximum demand of the consumer is
calculated by installing a maximum demand meter at his premises. This type of tariff is mostly
applied to the bulk consumers.

Power factor tariff:

The tariff in which the power factor of the consumers is taken into account is known as power factor
tariff.

Three part Tariff:

When the total charges to be made from the consumer is split into three parts, fixed charge,
semifixed charge and running charge, it is known as three-part tariff. This type of tariff is applied to
big consumers. The principle objection of this type of tariff is the charges are split into three
components ( fixed charge, charge per kW of maximum demand, charge per kWh of energy
consumed)
A tariff is the way you get charged for your energy.

Choosing the right tariff for you can help reduce what you pay for your energy.

To help you work out what’s best for you, we’ll explain:

 what the different tariffs are, and

 how they work.

Electricity tariffs

There are three types of electricity tariffs:

 single rate

 time of use (including flexible pricing), and

 controlled load.

Single rate tariffs

With single rate tariff offers there are no peak or off-peak periods. This means that you pay the
same rate whatever time of day you use energy.

The rate is usually lower than the peak rates of a time of use or flexible pricing tariff. This means a
single rate offer could be a good choice if:

 You are at home a lot in the evening Monday to Friday. 

 You need to use your appliances more Monday to Friday, like your washing machine or
dishwasher.

Single rate tariffs are sometimes called:

 flat rate

 standard rate 

 anytime rate, or

 peak rate.

Single rate tariffs are available to everyone. You don’t need a smart meter to get a single rate tariff
offer.

Time of use tariffs

A time of use tariff means that electricity costs different prices at different times of the day.

 Peak—electricity costs the most. Peak rates usually apply in the evening on Monday to
Friday. 

 Off-peak—electricity is cheapest. Off-peak rates usually apply overnight on Saturday and

 Shoulder—electricity costs a bit less than peak. Shoulder rates usually apply in between
peak and off-peak periods.
A time of use tariff offer could be a good choice if:

 You are out a lot in the evenings Monday to Friday. 

 You are at home during the day or on weekends. 

 You use your appliances on the weekend, like your washing machine or dishwasher.

Some retailers have even more time periods than peak, shoulder and off-peak—for example, a

Flexible pricing tariffs are not available in all areas yet. You will only be able to search for flexible
pricing tariff offers on Energy Made Easy if they are available in your area.

Retailers will tell you the start and end times of the different periods for their time of use offers in
the Energy Price Fact Sheet or the retailer's written summary of the offer.

To get a time of use tariff offer, you need a meter that measures your electricity usage at different
times of the day. For example, a smart meter or time of use meter.

Controlled load tariffs

For some appliances you can be charged a controlled load tariff, like:

 slab or underfloor heating, or

 electric hot water systems.

This means that the retailer charges a rate just for that appliance and the energy it uses. Often that
appliance has its own meter.

It is usually only for appliances that run overnight or in off-peak times. So controlled load rates are
usually lower.

Controlled load is sometimes called:

 dedicated circuit consumption, or 

 off-peak.

Gas tariffs

Gas offers are only available with single rate tariffs.

Most gas offers use tariff blocks. A tariff block is how the retailer charges you for the amount of gas
you use.

This means you pay:

 one rate or cost for the first part of your usage, then 

 a different rate or cost for the next part (or parts) of your usage.

Blocks can apply to:

 daily 

 monthly, or 
  quarterly usage.

Some gas offers have different rates for different times of the year, called seasonal rates. These
rates are usually higher in winter.