Unit 5

Tariff, Metering and Billing

By Prof.A.S.Potdar
Power Purchase Agreement
(PPA)

Power purchase agreement is agreement/deed

between Electricity Generating Authority (Seller)
and Electricity Purchaser (Buyer).

PPA includes-
1. Time of commencement of project
2. Schedule for delivery of electricity
3. Penalties
4. Payment Terms
5. Termination 2
Structure of Pricing

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Tariff Design

A tariff structure is set of rules and procedures that

determines how to change different categories of
consumers.
Typical tariff structure includes-
1. Flat Rate Tariff
2. Volumetric based tariff on actual metered
consumption
3. Multi Part Tariff
Tariff structure depends on many factors like Grid’s
characteristics, objective of pricing policy, type of
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consumer etc.
Steps of Designing of
Efficient Tariff

1. Gathering Information

2. Evaluation effectiveness of current tariff

structure

3. Announcement of Reform

4. Implementing the proposed reform

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Major Components of Electricity Bill

1. Fixed Charges

2. Energy Charges

3. Electricity Duty

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Special Tariffs

Average Billing Rate (ABR)- The ratio of the average

billing rate for a consumer category (ABR) to the
overall average cost of supply (ACoS) is an indicator
of tariff rationalization for that category of
consumer.
Aggregate Revenue Requirement (ARR)- ARR
means the annual revenue requirement
comprising of allowable expenses and return on
capital pertaining to the Generating Entity, for
recovery through tariffs, in accordance with these
Regulations. 7
Availability Based Tariff (ABT)- Electricity is a
commodity whose cost of storing is more than its
production cost. The most economical method for
electricity generation, transmission and
distribution is just in time production where the
availability and reliability of the entire system shall
be very high to meet the unpredictable electricity
demand on minute to minute basis.
Elements of ABT-
Capacity Charges, Energy Charges and
Unscheduled Interchange (UI) Charges 8
Time of Day (ToD) tariff is a tariff structure in which
different rates are applicable for use of electricity
at different time of the day.

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kVAh Tariff-
In kVAh based billing, fixed/ demand charges are
levied on apparent power (kVA) and energy
charges are levied on apparent energy (kVAh).

AS per MERC order in case no. 195 of 2017 dated

12 Sept 2018, the commission intends to
implement kVAh billing to all HT consumer and LT
consumers having load above 20kW from 1 April
2020.
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Net Metering

Net metering is a billing mechanism that credits

solar energy system owners for the electricity they
add to the grid.

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Gross Metering

In this, billing is done separately for the power

consumed from the grid and the power fed to the
grid.

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