Objectives of tariff system

There are objectives in tariff system as:

Equal distribution of cost :

• The most important objectives of the tariff are the fairly equal distribution of the cost of energy supply to different classes of users.
• Charges to be applied for consumption should be justification for each category of use.

Recovery of capital investment:

• Utility invests hugs amounts money in the system right from the generation to serve the energy in the consumer premises.
• Recovery of the cost incurred in all elements of power system i.e. Generation, Transmission and Distribution of Energy.

Recovery of running cost:

• Apart from the initial cost, it demands some costs to keep the system healthy in running condition.
• Recovery of the cost incurred in operation and maintenance and supply of equipment.

Recovery of miscellaneous cost:

• Distribution of energy to be the consumer involves many associated services in addition to only supply.
• Recovery of cost invested in miscellaneous services such as,

1. 1. Cost of metering equipment
   2. Billing
   3. Cost of the collection

Concluding a satisfactory return on the total investment is an ultimate objective.