9 b] What are the desirable characteristics of a tariff and explain two part tariff.
Solution:
A tariff must have following desirable characteristics −
Simplicity -The tariff should be simple so that an ordinary consumer can easily understand it.
Fairness– The tariff should be fair so that the different types of consumers are satisfied with the rate of charge of electricity.
Attractive– The tariff should be attractive so that large number of consumers are encouraged to use electricity.
Proper Return– The tariff should be such that it ensures the proper return from each consumer, i.e. the total receipt from the consumers must be equal to the cost of production and distribution with reasonable profit.
Two Part Tariff:
When the rate of electricity energy is charged on the maximum demand of the consumer and the units consumed is called two part tariff.
In this tariff scheme, the total costs charged to the consumers consist of two components: fixed charges and variable charges (running charges). It can be expressed as:
Total Cost = [A (kW) + B (kWh)] Rs
Where, Fixed charges – A = charge per kW of max demand
Variable charges – B = charge per kWh of energy consumed .It is obtained by multiplying no of units consumed and rate per unit.
The fixed charges will depend upon maximum demand of the consumer and the running charge will depend upon the energy (units) consumed. The fixed charges are due to
generation, transmission and maintenance.
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 – 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.