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A factory has an average load of 400 kW in an electrical power factor of 0.8 and a load factor of 0.5 with an average consumption of 50,000 units. If the tariff rate is Rs 50 per kVA of maximum demand and 1 rupee per unit of consumption, what will be the flat rate of energy consumption?
1. Rs. 1.8
2. Rs. 2.4
3. Rs. 1.6
4. Rs. 2

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Correct Answer - Option 4 : Rs. 2

Two-Part Tariff:

When the rate of electrical energy is charged based on the maximum demand of the consumer and the units consumed, it is called a two-part tariff.

In this method, the total charge is divided into two components: fixed charges and running charges.

The fixed charges depend upon the number of units consumed by the consumer.

The consumer is charged at a certain amount per kW of maximum demand plus a certain amount per kWh of energy consumed.

This type of tariff is mostly applicable to industrial consumers who have appreciable maximum demand.

Total charges = Rs (b × kW + c × kWh)

b = charge per kW of maximum demand

c = charge per kWh of energy consumed



Average load = 400 kW

Power factor = 0.8

Load factor = 0.5

Average consumption = 50,000 units

Tariff rate

Rs. 50 per kVA of maximum demand,

Rs. 1 per unit consumption.

As we know, a flat rate tariff is dependent only on maximum demand,

  \(LF= \frac{{AL × T}}{{MD × T}}\)


LF is Load Factor, AL is  Average Load, MD is Maximum Demand.

\(MD = \frac{{400}}{{0.5}} = 800\) kW

Rate is given 50 Rs per kVA,

So, we have to convert kW to kVA

Here, kVA = kW / P.F 

kVA = 800/0.8 = 1000 kVA

Total charges = Rs (b × kW + c × kWh)

b = charge per kW of maximum demand

c = charge per kWh of energy consumed

So, the rate is Rs. 50 per kVA of maximum demand,

= 1000× 50 = 50,000 Rs.

The kWh is 50,000 unit,

So, the rate is, 50,000× 1 = 50,000 Rs.

Total charges = Rs (50,000 + 50,000) = 100,000 

So, the rate per unit is,

=  100,000/ 50,000 = 2 Rs


Flat-rate tariff:

The flat-rate tariff is expressed as follows:

Z = ax

i.e., the bill depends only on the maximum demand irrespective of the amount of energy consumed. By use of this form of tariff, the cost of metering equipment and meter reading is eliminated.

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