Wednesday, July 16, 2014


Tariff means the schedule of rates or charges. In Nepalese context different types of consumers (small, medium large, industrial) are liable with different types of tariff.
Objectives of tariff:
·         Recovery of cost of capital investment in generating, transmitting and distributing equipment.
·         Recovery of cost of operation, supplies and maintenance of equipment
·         Recovery of cost of metering equipment, billing, collecting costs and miscellaneous services
·         A satisfactory return on the total capital investment

1.      Flat demand tariff:

This type of tariff is restricted to use in street lighting, signal systems, sign lighting and other loads where the energy consumption in quantity could be readily predicted,

Energy charges = Rs ax
Where; x = no. of lamps or per kW connected load
a= rate per lamp or per kW of connected load

2.    Simple tariff:

This is the simplest type of tariff structure where cost per kW is computed as:
Cost/ kWh =
It is not in practice due to following disadvantages:
·         No discrimination among the different types of consumers (domestic, industrial, bulk)
Having different load factor, diversity factor and power factor
·         Cost per kWh delivered is higher

3.    Flat Rate Tariff:

The different types of consumers are charged in different rates, the rate for each category of consumers is arrived at by taking into account its load factor and diversity factor.

·         Separate meters are required for different types of supply
·          Difficulty in calculating load factor and diversity factor of various types of loads to be employed in deciding tariff.

4.    Step Rate Tariff:

It is a group of flat rate tariffs of decreasing unit charges for higher range of consumption.

5.    Block Rate tariff:

A given block of energy is charged at higher rate and succeeding blocks of energy are charged at progressively reduced rates.
This type of energy charge is most popular now-a-days among domestic, commercial and small scale industrial consumers.

6.    Hopkinson Demand Rate or Two Part Tariff:

The total energy charge is split into two components namely fixed charge and running charge.
Energy Charge = Rs (a x kW + b x kWh)
This tariff is mostly applicable to medium industrial consumers.

7.    Maximum Demand Tariff:

In this method, maximum demand is measured by a maximum demand indicator which is applicable to all bulk supplies and large industrial consumers.
Such tariff induces the consumer to keep his/her maximum demand at low value.

8.    Power Factor Tariff:

In order to increase the utility of plants and equipment to the maximum, the plant must operate at the most economical p.f. This is sub divided into further three categories:
a.       kVA maximum demand tariff:
kVA demand can be vary by changing the p.f., increasing the p.f. maximum demand goes on decreasing. This scheme encourages the consumers to operate their machines and other equipment at improving p.f. as low p.f. will cause more demand charges.
b.       kWh and KVARh Tariff:
in this sub division of power factor tariff, kWh and kVARh are measured separately and energy charges are made applicable based on these values.
c.        Sliding Scale or Average p.f. Tariff:
In this type of power factor tariff, average p.f. may be chosen as 0.8as a reference and discount is made for increase in p.f. above o.8 and sub charges may be applied for p.f. below the reference value.

9.            Three Part Tariff:

The tariff charge applied is divided into three sub charges as fixed, semi fixed and variable charge.
Total charge = a +b x kW + cx kWh
a= fixed charge
b= charge per kW connected
c= charge per kWh energy
This type of tariff is usually applicable to bulk supplies.

10.     Off Peak Tariff:

The consumers are encouraged to use electricity during off peak hour by giving a special discount.

This type of tariff is very advantageous for certain processes such as water heater, thermal storage, pumping, refrigeration etc.