Electrical Engineering ⇒ Topic : Tariff

Tariff

The rate at which electrical energy is supplied to consumer is called tariff. Electrical energy is sold at such a rate so that it not only returns the cost but also earns reasonable profit. Therefore,a tariff should include the following:

• Recovery of cost of producing electrical energy at a power station.
• Recovery of cost on capital investment in transmission and distribution.
• Recovery of cost of operation and maintenance of supply of electrical energy.
• A suitable profit on the capital investment.

A tariff must have the following desirable characteristics: (i) proper return, (ii) fairness,(iii) simplicity, and (iv) reasonable profit.