It is significant to know the per-unit cost of electricity. It helps in understanding how much we are spending per appliance. You should understand the monetary impact of electricity efficiency measure. It is also important to know various components their contribution to the total electricity bill.
It is somewhat vital to understand the electricity bill. Each customer’s electricity bill is determined by three elements – the quantity of electricity used, the tariff for the category of customer, and the Fuel Surcharge Cost Adjustment Factor or fuel surcharge as it is commonly called.
It has different components that make plans for energy savings. Our electricity bills have lot of information. It gives us a good insight to our electricity intake patterns. A good understanding of various components can help in money saving exercise. In this, you will learn various sections/terms that are important:
Various Component Of Electricity Bills
1.Tariff / Category:
It regulates the structure of rate. Typical tariff codes start with LT (Low Tension) or HT (High Tension). LT codes are usually used for housing connections and personal offices. HT codes are usually used for bigger industries and complexes. Category in the bill decides if the connection is residential, commercial or industrial. Different rates/slabs are applicable for different tariff codes. Thus it is important to confirm that the right tariff code is applied on the electricity bill.
Units consumed is the number of kWh (Kilo-Watt-Hour) consumed in a month. 1 kWh is equal to keeping a 100 Watts bulb on for 10 hrs. This is the value that needs to come down to reduce the electricity bill. An observation of consumption history can give an indicator of the appliances. Also, determining the one having higher electricity consumption. Typically Air Conditioners increase consumption in summers.
3.Type of Supply & Connected Load:
Connected Load is the total supply that is offered to a meter. This is calculated in Kilo-Watts. It also determines if the connection will be a single phase or three phases. If load is more, then supply is three phases. Thus fixed charges are more. Services also charge more fixed amount for incremental connected load.
4.Fuel Adjustment Charge (FAC):
There is a FAC rate applicable at each slab. This is the extra cost of power incurred due to the fuel price increments. Fuel in most cases is coal. FAC will rise till alternate sources of electricity are not developed. State where they can generate electricity that cheap. So, electricity costs will surely increase in future. Fuel Adjustment (FA) is a change to monthly progress payments for cost changes in diesel fuel.
Understanding the elements discussed above can help you understand your electricity bill. It will also help you to plan your electricity consumption reduction project.
Have you ever questioned why your electricity bill amount is not consistent even when you have the same number of units consumed on the bill?
If you look at your bills you will find that there is an amount mentioned as FAC or FCA or FPPCA. It is either positive or negative and is creating the difference. Electricity consumption is noted in terms of Kilowatt Hour (kWh). The units consumed are further applied to a tariff structure. This structure comes up with energy or power charges.
Average Billing and How It Makes Your Bills High?
Most of the times there is no basis for this amount and is naturally calculated based on your past consumption. The real consumption is adjusted on number of units in the bills in following months. There can be various possibilities on the estimated consumption:
- More than your actual consumption – In this case, you pay more per unit for some of the units. Even if the numbers of units are adjusted in your following bills, you may have paid more per unit when you should have paid less.
- Less than your actual consumption – In this case, the differential units get collected. It can possibly make your consumption go to the higher slab. You again pay extra per unit of energy consumption.
How Fixed Charges Harm Customers
Recently, there has been a sharp rise in the number of utilities proposing to recover more of their costs. This is done through monthly fixed/static charges rather than rates based on usage. Utilities prefer to collect revenue through fixed charges. It is because the fixed charge reduces the utility’s risk that lower sales. These sales can be from energy efficiency, distributed generation, weather, or economic downturns and it will reduce the revenues. Nevertheless, higher fixed charges are an unfair and inefficient means to address utility concerns.
- Fixed charges reduce customer control
- Low-usage customers hit hardest
- Disproportionate impacts on low-income customers
- Reduced incentives for power efficiency
- Increased electricity system costs