How does electricity tariff work?
The cost at which electrical energy is sold to a customer is known as the electricity tariff. The electricity tariff singapore is around 30.17 cents per kWh. However, the tariff should reflect the profit earned by the power provider and the cost of producing and supplying electrical energy. The cost of producing electrical energy depends on the amount of electrical energy consumed by the user and the conditions of his load; therefore, in practice, the tariff cannot be the same for all sorts of users. As a result, the various consumer types—including household, industrial, and commercial—are considered when determining the tariff.
The purpose of tariffs
Electrical energy is sold at a price that covers its cost of production and transmission and generates a respectable profit, just like any other product. Consequently, a tariff should take the following into account:
- The cost of producing electrical energy at the power plant should be recovered.
- The expense of the investment in electrical energy transmission and distribution should be recouped.
- It should include the expense of running and maintaining the various components of the power system, including the meters, tools, bills, etc.
- Additionally, it must return a profit on the investment.
The following desirable traits should be included in a tariff:
The tariff should be straightforward to grasp for the average consumer.
The tariff should be equitable so that various consumers are happy. Attractive – The tariff needs to entice many users to utilize power.
The tariff should be set up to ensure that each consumer receives the proper return.
The actual rates a consumer pays depend on how much electricity they use. The cost to the consumer varies depending on their needs.