What is tariff structure?

The electric rate is the price you pay per unit of electricity to your energy utility or retailer. The electricity tariff (or rate) structure is the combination of rates, additional charges, and other rules that determine how your electricity bill is calculated.

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 ensure that the tariff such that it not only recovers the total cost of producing electrical energy but also earns a profit on the capital investment.

Tariff structure

  • Tariff structure means the type of tariff.
  • Each tariff structure has the different calculation to calculate the total energy which consumer to calculate the total energy charge which consumer has to pay for his consumption.
  • Electricity tariff can have various forms which vary from country to country as well as different markets of the same country.
  • Tariff scheme also differs according to consumer categories.

Consumer categories are:

  • Residential
  • Commercial
  • Industrial
  • Agricultural

Different types of tariff:

  • Flat demand tariff
  • Simple tariff
  • Flat rate tariff
  • Step rate tariff
  • Block rate tariff
  • Two part tariff
  • Three part tariff

Apart from this more specific tariffs like:

  • Time off day tariff
  • Time of use tariff
  • Power factor tariff
  • Maximum demand tariff
  • Load factor tariff

Tariff Categories

  • Tariff categories are classes of customers with common/shared characteristics that are grouped together for ease and consistency of charging.
  • While categories may be based on a number of shared characteristics, tariff categories are usually defined by one or more of the following criteria:
  1. Type of consumer (e.g.- domestic, commercial, industrial, street lighting)
  2. Usage characteristics (e.g.- load factor, percent of use on-peak)
  3. Quality of service (e.g.- firm or interruptible; type of distribution layout)
  4. Voltage level of service
  5. Location (e.g., geographical area)
  • Transmission tariffs normally apply to broader groupings of customers than distribution or supply tariffs.
  • Supply tariffs vary considerably by customer type, particularly in deregulated markets such as the UK.
  • However, in Ireland regulated supply and distribution tariffs have until now been defined according to:
  1. Voltage level (in general)
  2. Domestic/commercial use (of connected premises at LV level)
  3. Metering (also at LV level)
  • Low voltage customers are divided by the domestic and commercial use of the connected premises.
  • Business customers are often sub-categorized according to their size and what metering is in place – electromechanical metering or Maximum Demand metering.
  • Larger Customers, on the other hand, are associated with the voltage level at which they are connected.

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