UNDERSTAND YOUR ELECTRICITY BILL
UNDERSTAND YOUR ELECTRICITY BILL
It is very important to understand the electricity bill and it's components to make plans for energy savings. Our electricity bills have quite a lot of information to give us a good insight to our electricity consumption patterns. A good understanding of various components can help one plan for money saving exercise. Here, we will discuss various sections/information on electricity bills that are important:
o Tariff / Category: Tariff and Category determine the rate structure applicable on the bill. Typical tariff codes start with LT (Low Tension) or HT (High Tension). LT codes are typically used for residential connections and small offices . HT codes are typically used for bigger industries and complexes. Category in the bill determines if the connection is residential, commercial or industrial. Different rates/slabs are applicable for different tariff codes and thus it is important to validate that the right tariff code is applied on the electricity bill. This information is available on bill header as shown below:
o Type of Supply & Connected Load: Connected Load is the total pool of supply that is given to a meter. This is calculated in kW (or Killo-Watts). This is the total peak kW given to a meter based on the appliances connected to the meter. This is not your actual energy consumption and only impacts fixed charges on your electicity bill. Connected load also determines if the connection will be a single phase or three phase. If load is more then supply is three phase and thus fixed charges are more. Utilities also charge more fixed cost for incremental connected load. Below is a screenshot from Reliance Energy bill in Mumbai:
o Units Consumed: Units consumed is the number of kWh (Killo-Watt-Hour) consumed in a month. 1 kWh is equivalent to keeping a 100 Watts bulb on for 10 hrs. This information is calculated by finding the difference between meter readings of two consecutive months. This is the total monthly consumption by all the appliances that are connected to the meter. This is the value that needs to come down in order to reduce the electricity bill. An observation of consumption history can give an indictor of the appliances having higher electricity consumption (typically Air Conditioners increase consumption in summers).
o Tariff Structure: It is very important to note the tariff structure on your bill, as this is the best indicator of how the bill can be reduced. Typically for residential and SMB commercial connections, the structure is slab based (unlike industrial connections where units are charged at a high flat rate). The intent behind the slab structure is to reward low energy users and charge extra to those who have high consumption. The slabs are based on the "Units Consumed" that we discussed earlier. As the number of units consumed increase, energy charge changes and also the fixed costs associated with the slab increases. Below is a sample of tariff structure from a bill from Mumbai:
o Fuel Adjustment Charge (FAC): As you can see in the tariff structure above, there is a FAC rate applicable at each slab. This is the additional cost of power incurred due to fuel price increments during a year. Fuel in most cases is Coal. As per a study, after 2011, the production rates of coal will decline, reaching 1990 levels by the year 2037, and reaching 50% of the peak value in the year 2047. So invariably FAC will increase till alternate sources of electricity are not developed to a state where they can generate electricity that cheap. So electricity costs will surely increase in future.
Understanding the elements of electricity bill mentioned above can help you understand your electricity bill and will also help you to plan your electiricty consumption reduction project. Two things that should be targetted are: Units Consumed and Connected Load. Reduce the two and your electricity bill will surely come down.
WHAT ARE FUEL ADJUSTMENT CHARGES?
Have you ever wondered why your electricity bill amount is not the same even when you have the same number of units consumed on the bill? Why is it that the electricity bill is different even when you have not changed your electricity consumption? If you look at your bills you will just find that there is an amount mentioned as FAC or FCA or FPPCA, which is either positive or negative and is creating the difference.
What is FAC/FCA or FPPCA?
FAC (Fuel Adjustment Charge) or FCA (Fuel Cost Adjustment) or FPPCA (Fuel and Power Purchase Cost Adjustment) is amount that utilities apply on bills based on varying price of fuel or Coal. The price of coal or fuel changes every month based on demand and supply of coal and thus cost of producing electricity changes accordingly. The electricity generation companies pass on this cost to distribution companies who there by pass it on to consumers.
Why FAC is not included in the tariff slabs?
Electricity regulatory commissions of various states fix tariffs for electricity in India periodically. The revision happens every few years (every year in some cases) and a new tariff is set based on the cost of production and distribution of electricity. But the prices of fuel or coal changes throughout the year and the utilities have to manage these changing costs by passing it to the consumer.
How frequently does FAC change?
It varies from state to state. In some places like Mumbai, FAC is calculated every month. In most of the states it is Quarterly. In Madhya Pradesh it is Half Yearly and in West Bengal it is yearly. In some states like Chhattisgarh and Tripura it is revised on need basis from time to time. In case new tariffs are not defined frequently, the FAC component in electricity bill can be as much as the electricity tariff amount.
How is FAC calculated?
Every state has a different formula to calculate FAC amount. We are in process of collecting this information. We will update the readers of Bijli Bachao as soon as we get this information handy.
How does FAC impact my electricity bill?
It is a charge that is applicable per unit of electricity consumed. Unlike fixed charges it is a variable component on the electricity bill and changes as per your consumption of electricity every month. At times it is negative as well but mostly it is positive. Any reduction in monthly consumption of electricity will surely help in bringing down the amount in this component. So keep reading Bijli Bachao and reduce your electricity consumption.
UNDERSTAND ENERGY CHARGES IN THE ELECTRICITY BILL
Have you received your electricity bill recently and you are trying to understand what are the energy charges on your electricity bill? If that is the case then you are not alone, as electricity bill is the most complex bill that one receives.. In case you are trying to understand what it actually means, then it is the charges for the electricity you have used (excluding the fixed charges and other rents).
How are energy charges calculated?
Electricity consumption is recorded in terms of kWh (Kilowatt Hour) or Units by the electricity meter installed in your premise. A Kilowatt Hour is equivalent to running an appliance of 1 Kilowatt (or 1000 Watts) for 1 hour. A person from your utility (or DISCOM or distribution company) visits your premise at a selected frequency (in most states it is monthly, but in some states it is bimonthly or even quarterly based on choice) and records the reading on your meter. This meter reading is subtracted from your previous meter reading to come up with the units consumed (or kWh consumed) for the period. The units consumed are then applied to a slab based tariff structure to come up with energy or electricity charges.
How is slab based tariff structure designed?
In all states the tariff structures for residential consumers are designed in such a way that per unit charge is less if your consumption is less and more if your consumption is more. In fact it increases significantly as you increase your electricity consumption. For e.g. in Mumbai Reliance energy has following tariff:
First 100 units: Rs 2.96/unit
Next 200 units (from 101 to 300): Rs 5.56/unit
Next 200 units (from 301 to 500): Rs 9.16/unit
Any units after that (above 500): Rs 10.61/unit
So taking the above case, if your consumption is less than 100 units, you just pay Rs 2.96 per unit. But if your consumption increases beyond 500 units, every unit above 500 is charged at Rs 10.61 per unit. So if you consumed 540 units in a month, your bill will be calculated as:
First 100 units @ Rs 2.96 = Rs 296
Next 200 units @ Rs 5.56 = Rs 1112
Next 200 units @ Rs 9.16 = Rs 1832
Final 40 units @ Rs 10.61= Rs 424.4
So if you see you pay higher amounts per unit as your consumption increases. The motive behind such structure is to motivate people to consume less electricity.
In case you want to see the tariff structure applicable in your location, you can check our link: Domestic LT Tariff Slabs and Rates for all states in India in 2012.
Average billing: how it can make your bills high?
There are times when the person who comes for meter reading does not find you at home and you get a bill with average amount (or average consumption). Most of the times there is no basis for this number and is typically calculated based on your past consumption. The actual consumption is adjusted on number of units in the bills in following months. There can be 2 possibilities on this assumption:
1. The estimated consumption is more than your actual consumption: In this case, if your actual consumption was in a lower slab but the estimated consumption is on higher slab, you pay more per unit for some of the units. Even if the numbers of units are adjusted in your next bills, you may have paid more per unit when you should have actually paid less.
2. The estimated consumption is less than your actual consumption: In this case the differential units get accumulated and can possibly make your consumption go to the higher slab, and you again pay more per unit of electricity consumption.
Thus it is very important that the person coming for meter reading is able to do his job everytime. In case you get into a situation, make sure that you validate your amounts (you can do that using our calculator) before making the payment.
Smart Meters: How can they help?
In the age of improving information technology, we have a solution for the problem discussed above: Smart Meters. These are electronic meters that are connected back with the utility through the Internet. With these meters, no one need to come to your place to take a meter reading as the smart meters send this information back to the utility. There are several places where projects are going on for smart meter implementation and we hope that we have such meters everywhere in our country soon.
It is very important to understand the electricity bill and it's components to make plans for energy savings. Our electricity bills have quite a lot of information to give us a good insight to our electricity consumption patterns. A good understanding of various components can help one plan for money saving exercise. Here, we will discuss various sections/information on electricity bills that are important:
o Tariff / Category: Tariff and Category determine the rate structure applicable on the bill. Typical tariff codes start with LT (Low Tension) or HT (High Tension). LT codes are typically used for residential connections and small offices . HT codes are typically used for bigger industries and complexes. Category in the bill determines if the connection is residential, commercial or industrial. Different rates/slabs are applicable for different tariff codes and thus it is important to validate that the right tariff code is applied on the electricity bill. This information is available on bill header as shown below:
o Type of Supply & Connected Load: Connected Load is the total pool of supply that is given to a meter. This is calculated in kW (or Killo-Watts). This is the total peak kW given to a meter based on the appliances connected to the meter. This is not your actual energy consumption and only impacts fixed charges on your electicity bill. Connected load also determines if the connection will be a single phase or three phase. If load is more then supply is three phase and thus fixed charges are more. Utilities also charge more fixed cost for incremental connected load. Below is a screenshot from Reliance Energy bill in Mumbai:
o Units Consumed: Units consumed is the number of kWh (Killo-Watt-Hour) consumed in a month. 1 kWh is equivalent to keeping a 100 Watts bulb on for 10 hrs. This information is calculated by finding the difference between meter readings of two consecutive months. This is the total monthly consumption by all the appliances that are connected to the meter. This is the value that needs to come down in order to reduce the electricity bill. An observation of consumption history can give an indictor of the appliances having higher electricity consumption (typically Air Conditioners increase consumption in summers).
o Tariff Structure: It is very important to note the tariff structure on your bill, as this is the best indicator of how the bill can be reduced. Typically for residential and SMB commercial connections, the structure is slab based (unlike industrial connections where units are charged at a high flat rate). The intent behind the slab structure is to reward low energy users and charge extra to those who have high consumption. The slabs are based on the "Units Consumed" that we discussed earlier. As the number of units consumed increase, energy charge changes and also the fixed costs associated with the slab increases. Below is a sample of tariff structure from a bill from Mumbai:
o Fuel Adjustment Charge (FAC): As you can see in the tariff structure above, there is a FAC rate applicable at each slab. This is the additional cost of power incurred due to fuel price increments during a year. Fuel in most cases is Coal. As per a study, after 2011, the production rates of coal will decline, reaching 1990 levels by the year 2037, and reaching 50% of the peak value in the year 2047. So invariably FAC will increase till alternate sources of electricity are not developed to a state where they can generate electricity that cheap. So electricity costs will surely increase in future.
Understanding the elements of electricity bill mentioned above can help you understand your electricity bill and will also help you to plan your electiricty consumption reduction project. Two things that should be targetted are: Units Consumed and Connected Load. Reduce the two and your electricity bill will surely come down.
WHAT ARE FUEL ADJUSTMENT CHARGES?
Have you ever wondered why your electricity bill amount is not the same even when you have the same number of units consumed on the bill? Why is it that the electricity bill is different even when you have not changed your electricity consumption? If you look at your bills you will just find that there is an amount mentioned as FAC or FCA or FPPCA, which is either positive or negative and is creating the difference.
What is FAC/FCA or FPPCA?
FAC (Fuel Adjustment Charge) or FCA (Fuel Cost Adjustment) or FPPCA (Fuel and Power Purchase Cost Adjustment) is amount that utilities apply on bills based on varying price of fuel or Coal. The price of coal or fuel changes every month based on demand and supply of coal and thus cost of producing electricity changes accordingly. The electricity generation companies pass on this cost to distribution companies who there by pass it on to consumers.
Why FAC is not included in the tariff slabs?
Electricity regulatory commissions of various states fix tariffs for electricity in India periodically. The revision happens every few years (every year in some cases) and a new tariff is set based on the cost of production and distribution of electricity. But the prices of fuel or coal changes throughout the year and the utilities have to manage these changing costs by passing it to the consumer.
How frequently does FAC change?
It varies from state to state. In some places like Mumbai, FAC is calculated every month. In most of the states it is Quarterly. In Madhya Pradesh it is Half Yearly and in West Bengal it is yearly. In some states like Chhattisgarh and Tripura it is revised on need basis from time to time. In case new tariffs are not defined frequently, the FAC component in electricity bill can be as much as the electricity tariff amount.
How is FAC calculated?
Every state has a different formula to calculate FAC amount. We are in process of collecting this information. We will update the readers of Bijli Bachao as soon as we get this information handy.
How does FAC impact my electricity bill?
It is a charge that is applicable per unit of electricity consumed. Unlike fixed charges it is a variable component on the electricity bill and changes as per your consumption of electricity every month. At times it is negative as well but mostly it is positive. Any reduction in monthly consumption of electricity will surely help in bringing down the amount in this component. So keep reading Bijli Bachao and reduce your electricity consumption.
UNDERSTAND ENERGY CHARGES IN THE ELECTRICITY BILL
Have you received your electricity bill recently and you are trying to understand what are the energy charges on your electricity bill? If that is the case then you are not alone, as electricity bill is the most complex bill that one receives.. In case you are trying to understand what it actually means, then it is the charges for the electricity you have used (excluding the fixed charges and other rents).
How are energy charges calculated?
Electricity consumption is recorded in terms of kWh (Kilowatt Hour) or Units by the electricity meter installed in your premise. A Kilowatt Hour is equivalent to running an appliance of 1 Kilowatt (or 1000 Watts) for 1 hour. A person from your utility (or DISCOM or distribution company) visits your premise at a selected frequency (in most states it is monthly, but in some states it is bimonthly or even quarterly based on choice) and records the reading on your meter. This meter reading is subtracted from your previous meter reading to come up with the units consumed (or kWh consumed) for the period. The units consumed are then applied to a slab based tariff structure to come up with energy or electricity charges.
How is slab based tariff structure designed?
In all states the tariff structures for residential consumers are designed in such a way that per unit charge is less if your consumption is less and more if your consumption is more. In fact it increases significantly as you increase your electricity consumption. For e.g. in Mumbai Reliance energy has following tariff:
First 100 units: Rs 2.96/unit
Next 200 units (from 101 to 300): Rs 5.56/unit
Next 200 units (from 301 to 500): Rs 9.16/unit
Any units after that (above 500): Rs 10.61/unit
So taking the above case, if your consumption is less than 100 units, you just pay Rs 2.96 per unit. But if your consumption increases beyond 500 units, every unit above 500 is charged at Rs 10.61 per unit. So if you consumed 540 units in a month, your bill will be calculated as:
First 100 units @ Rs 2.96 = Rs 296
Next 200 units @ Rs 5.56 = Rs 1112
Next 200 units @ Rs 9.16 = Rs 1832
Final 40 units @ Rs 10.61= Rs 424.4
So if you see you pay higher amounts per unit as your consumption increases. The motive behind such structure is to motivate people to consume less electricity.
In case you want to see the tariff structure applicable in your location, you can check our link: Domestic LT Tariff Slabs and Rates for all states in India in 2012.
Average billing: how it can make your bills high?
There are times when the person who comes for meter reading does not find you at home and you get a bill with average amount (or average consumption). Most of the times there is no basis for this number and is typically calculated based on your past consumption. The actual consumption is adjusted on number of units in the bills in following months. There can be 2 possibilities on this assumption:
1. The estimated consumption is more than your actual consumption: In this case, if your actual consumption was in a lower slab but the estimated consumption is on higher slab, you pay more per unit for some of the units. Even if the numbers of units are adjusted in your next bills, you may have paid more per unit when you should have actually paid less.
2. The estimated consumption is less than your actual consumption: In this case the differential units get accumulated and can possibly make your consumption go to the higher slab, and you again pay more per unit of electricity consumption.
Thus it is very important that the person coming for meter reading is able to do his job everytime. In case you get into a situation, make sure that you validate your amounts (you can do that using our calculator) before making the payment.
Smart Meters: How can they help?
In the age of improving information technology, we have a solution for the problem discussed above: Smart Meters. These are electronic meters that are connected back with the utility through the Internet. With these meters, no one need to come to your place to take a meter reading as the smart meters send this information back to the utility. There are several places where projects are going on for smart meter implementation and we hope that we have such meters everywhere in our country soon.
Dear sir, I m running a small factory in Assam of wire nails & Binding Wire. My electro bills r too high due to which my production cost become high. Can I got ur cell no. To discuss something with u. My cell no. Is 88222-35043. Plz help me if u can...
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