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10 Energy Rates

The document outlines the various costs associated with electrical energy, including fixed costs, energy costs, and customer supply charges. It also discusses the expected return on investment for investors and provides examples of rate structures for electricity billing. Additionally, it includes problems and solutions related to calculating generating costs and comparing energy supply options for consumers.

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devidleo30
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5 views44 pages

10 Energy Rates

The document outlines the various costs associated with electrical energy, including fixed costs, energy costs, and customer supply charges. It also discusses the expected return on investment for investors and provides examples of rate structures for electricity billing. Additionally, it includes problems and solutions related to calculating generating costs and comparing energy supply options for consumers.

Uploaded by

devidleo30
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Energy Rates

Objectives
Cost of electrical energy
1) Cost of installation of the plant – Fixed Cost
2) Cost of energy production – Energy cost
3) Customer supply charges

Fixed Cost:
▪ Capital cost of power plant
➢ Cost of land
➢ Cost of building
➢ Cost of equipment
➢ Cost of installation
➢ Cost of designing and planning of the station
▪ Capital cost of transmission, distribution and substation
▪ Interest, taxes and insurance cost
▪ General management and maintenance cost
▪ Depreciation cost – It is the amount to be set aside per year from income to
meet the depreciation caused by the age of service, wear and tear of
machinery. Depreciation amount collected per year helps in replacing and
repairing equipments.
Energy Cost
▪ Cost of fuel
▪ Cost of operating labour
▪ Cost of maintenance, labour and materials
▪ Cost of supplies such as
➢ Water for feeding boiler, condenser and for general use
➢ Lubricating oil
➢ Water treatment chemical etc.

Customer supply charges


▪ Capital cost of secondary distribution system
▪ Cost of inspection and maintenance of distribution lines and transformers
▪ Cost of labour for meter reading and office work
▪ Cost of publicity

Investors Profit
The investor expects a satisfactory return on capital investment. The rate of profit
depends on business condition.
General Rate Form
The size and cost of installation in a generating station is determined by the maximum
demand by different consumers on the station. Each consumer expects his maximum
demand to be met at any time of the day and night.

Since storing electrical energy is not conventional, hence the generating equipment has to be
held in readiness to meet every consumer’s full requirement at all hours of the day.

This virtually demands to allocate a certain portion of the generating plant and the associated
distribution system to each consumer for his individual use. Hence, it is only fair that a
consumer should pay the fixed charges on that portion of the plant that can be assumed to
have been exclusively allocated to him plus the charges proportional to the units actually
used by him.

Straight meter rate


Flat Demand Rate
Straight Meter Rate
Step Meter rate
Y/Z=Cost per unit, cents per kwhr
Example 34.1
Block Meter Rate
Example 34.2
Hopkinson Demand Rate
Example 34.3
Doherty Rate
Wright Demand Rate
Rate Adjustments
Example 34.4
Rate Design
Problem#1

Determine the generating cost per unit of 8MW power station with the following
data:
Capital cost=Tk 40×105/-
Annual cost of fuel= Tk 80,000/-
Annual wages and taxes= Tk 90,000/-
Interest and depreciation= 10%
Annual load factor= 45%

Solution:

Total cost/year= Interest & depreciation + cost of fuel + cost of wages & taxes
= (10% of 40×105/-) + 80,000/- + 90,000/- =Tk 5.7×105/-

Average load= Load factor × Maximum demand= 0.45 × 8= 3.6MW

Energy produced per year= 3.6 × 8760 MWh = 3600 × 8760 kWh

Energy cost per unit (kWh)= (5.7×105/-) / (3600×8760)= Tk 0.018/- or 1.8 paisa
Problem#2

In a 60MW steam power station working at 40% load factor, the energy cost is
found to be 1.5 paisa/kWh. Calculate the cost of energy if the power station load
factor is improved to 50%. Due to increased generation, the fuel cost increases the
annual generation cost by 6%.

Solution:

Load factor = Lav / Lmax


Average load, Lav= 0.4×60,000kW = 24,000kW
Annual energy production = 24,000×8760 = 210×106 kWh
Total annual cost= 210×106×(1.5/100) = Tk 315×104/-

When the load factor is 50%,


Annual energy production= 0.5×60,000×8760 = 262×106kWh

Annual cost at 50% load factor= Tk 315×104×1.06= Tk 333×104/-


Cost per kWh= Tk (333×104/-) / (262×106) = Tk 0.012 /- or 1.23 paisa
Problem#3

An electric supply undertaking generator generates 400×106kWh per annum and


supplies consumers having aggregated maximum demand of 175MW. The annual
expenses including capital charges are Fuel Tk 30,00,000/- (90% of fuel cost are
assigned as running charges). Fixed expenses connected with generation Tk
45,00,000/-. Transmission and distribution expenses Tk 52,50,000/-. If losses in the
transmission and distribution reach 10% of the kWh generated, deduce a two-part
tariff to represent the actual cost of supply to the consumer.

Solution:
Total fixed charges per annum= fixed charges for generation + transmission and
distribution charges + 10% of fuel cost
= 45,00,000/-+52,50,000/- +3,00,000/-
= Tk 1,00,50,000/-
Cost per kW of maximum demand= 1,00,50,000 Tk / 175×103 kW =Tk 57.43/-
Running charges per annum= 90% of fuel cost= Tk 27,00,000/-
Actual energy supplied to the consumer= 400×106×0.9=360×106 kWh (Due to 10%
transmission losses)
Running cost per kWh=27,00,000/360×106 = 0.75 paisa
Problem#4
A new factory having a maximum demand of 700kW and a load factor of 25% is comparing per unit
generation cost of two supplying agencies-
a) Public supply tariff is Tk 40 per kW of maximum demand + 2 paisa per kWh
Capital cost= Tk 70,000/-
Interest and depreciation= 10%
b) Private oil engine generating station
Capital cost= Tk 2,50,000/-
Fuel consumption= 0.3kg per kWh
Cost of fuel= Tk 70 per ton
Wages= 0.4 paisa per kWh
Maintenance cost= 0.3 paisa per kWh
Interest and depreciation= 15%

Solution:
Average load= load factor × Maximum demand=0.25 ×700=175kW
Energy consumed per year= 175 ×8760=153.3 ×104kWh
a) Public supply
Maximum demand charge=40 ×700=Tk 28,000/-
Energy charge per year= 0.2 × 153.3 ×104=Tk 30,660/-
Interest and depreciation=0.1×70,000/-=Tk 7000/-
Total cost= Tk (28,000+30660+7000)= Tk 65660/-
Energy cost per unit=65600/ (153.3 ×104)=4.29 paisa
b) Private oil engine generating set
Fuel consumption=0.3×153.3 ×104/1000=460tons
Cost of fuel=460×70=Tk 32200/-
Cost of wages and maintenance= (0.004+0.003) × 153.3 ×104= Tk 10731
Interest and depreciation=0.15 ×250000=Tk 37500
Total cost=32200+10731+37500=Tk 80431
Energy cost per unit=80431/ (153×104)=5.2 paisa
Assignment:

Analyse your own home electric bill. Use the lessons learnt in this chapter to
match the bill (monthly payable amount without fine) generated by the utility
with your calculation.

Hints: Find out your supply authority. Go to their website to get the most recent
tariff. Find out which energy rate formula they have used.

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