What are tariff and term involved?

Tariff

In simplest terms, a tariff is a tax. It adds to the cost of imported goods and is one of several trade policies that a country can enact.

A tariff is a tax on imports or exports. Money collected under a tariff is called a duty or customs duty. Tariffs are used by governments to generate revenue or to protect domestic industries from competition.

Terms involved in tariff

Units Consumed :

• Units consumed specify the aggregate amounts of electricity utilized over the certain duration.
  It is obtained from meter reading.

Connected load:

• Connected load is the total wattage of appliances which are being used on the sanctioned connection.
  It has an effect on the fixed charges for a particular connection.

Fixed charges:

• It’s a fixed amount of charge included in monthly electricity bill which depends on the type of connection and connected the load.

Electricity tax :

• Some states put a tax on the transaction of electricity. This is often charged in the percentage of total amount of bill.
• Point to be noted that government receives this amount and not the utility.

Electricity duty :

• Some states apply duty on the supply of electricity which is often charged an additional cost per unit or may also be in percentage.
• Point to be noted that government receives this amount and not the utility.

Tariff structure:

• The rate at which consumption unit is charged at energy price is specified by tariff structure.

Fuel surcharge:

• Tariff structure is set up for a year or two, cost of generation changes every month.
• Fuel surcharge apprehends changing the cost of generation.
• It is applied per unit.

Electricity tariff