The previous section briefly described how the revenues required to support project costs are established.
The purpose of a tariff schedule is to define the structure by which the various consumers will then contribute to these revenues. While there are numerous options, they basically fall into two categories:
energy-based and power-based.
Energy-based tariff
The bill paid by a consumer under this type of tariff is determined by the actual quantity of energy is actually used by the consumer. This is measured through the use of an energy or kilowatt-hour meter.
This may be regarded as a more equitable approach, because a consumer is charged according to the energy actually consumed. Those who use less electricity pay less.
Energy meters are commonly used for large-grid-connect systems, where they present several advantages:
• They provide an accurate record of power consumption for both billing and planning purposes.
• Meters encourage energy conservation because the customer's consumption directly determines his or her bill. The consumers save if they reduce electricity use.
• Meter readings can help with the detection of fraud or meter failures because unusual trends in consumption can be used as a signal to initiate an investigation.
• Time-of-day meters (i.e., meters which measure consumption during different portions of the day) can be used that discourage consumption at peak times and encourage the use of off-peak power (although these are more expensive than standard meters).
However, meters also have a number of drawbacks:
• Good-quality meters add to the consumers' cost for accessing electricity. In an attempt to reduce this cost, low-quality energy meters may be used and these may have the problem of unreliably recording the low demand levels (e.g., 10 W to run a fluorescent light or less to power a small radio). More importantly, the costs associated with meter reading, accounting, billing, and revenue collection are significant, especially if the consumers are widely dispersed or remotely located. With low consumption levels commonly found in rural areas, these costs can add considerably to the overall costs of service.
Box 15. Example of deriving the monthly revenue required to cover project costs.
A village with 40 families has undertaken a mini-grid project powered by a 3 kW diesel genset dedicated to electricity generation for residential use. All families have indicated an interest in receiving electricity and it is estimated that they would use an average of 60 W for the four hours that the plant will be operating every evening.
The capital cost of a mini-grid project, including a powerplant and housewiring is $12,000. To cover this cost, a grant for $4,000, which also covered the cost of the diesel genset, was obtained. The balance was loaned to the community by an NGO under the agreement by which loan repayments would be deposited into a revolving fund that would then provide a source of funding for future projects. The agreement stipulates that the loan has to be paid back in equal installments over 6 years at an interest rate of 10%.
The plant operator will be paid a sum of $20/month to operate the plant, to undertake routine maintenance, and to collect the monthly payments from the consumers.
The supplier of the diesel genset notes the following:
• Fuel consumption: 2 kWh per liter when the plant is running above half-load and the cost of diesel fuel in the village is $0.40/liter.
• Oil change every 300 hours at a cost of $5.
• Overhaul every 4,000 hours at a cost of $1,100.
Determine the monthly costs to be raised by revenue from the sale of electricity to cover all costs incurred and estimate what the average tariff should be levied on each consumer to generate this revenue.
Solution:
1. Covering a loan of $8,000 at 10 % for 6 years would require a payment of PMT = ($8000)(.019)
= $152/month.
2. The monthly energy requirement will be
( )
290,000W hours 290kWhThis will require about 150 liters of diesel at $0.40/liter, costing CF = $60/month.
The operator's remuneration CO = $20/month.
Each month, the mini-grid will be operating 120 hours. Maintenance is restricted to an oil change and an overhaul. On a monthly basis, the cost for these will be
month
The diesel engine has to be replaced in about 6 years for a future cost estimated at $2,300. Revenues of CR = $26 must be invested monthly in the village’s savings account at 8 % interest.
The total revenues which must be generated is CT = $290.
The tariff schedule must next be set in order to generate $290 monthly to cover the cost of generating 290 kWh during this period. Several examples of tariff schedules are found in Box 16.
• Consumers, who have had no formal education, may have difficulty understanding how to read the meter and, therefore, the charge they are required to pay. This can result in unexpectedly high bills and, in some cases, can lead to exploitation by fraudulent meter readers.
• Meters alone do not limit peak demand of each consumer; neither do they prevent the supply from becoming overloaded. If meters are used, without additional load-limiting components, it is possible for a few, wealthier households to consume more than their share of the power, leaving little for the others, or to even overload the system. For small schemes with limited generation capacity, it is essential that this condition be avoided so that the power available can be equitably shared.
• With a system employing conventional energy meters and meter readers, if any consumer does not pay his bill, he or she will eventually (the sooner the better) have to be disconnected and then reconnected if and when cash is again available. The utility and the consumer have to bear the cost of these activities and the inconveniences.
The drawback arising from the additional cost of meter reading and billing associated with the use of energy meters can be partly addressed by performing these tasks at less frequent intervals or by having the consumer read his own meter (and periodically cross-checked by the system operator).
The prepayment meters (or electricity dispensers) are another alternative which obviates the need for meter reading, billing, and collecting altogether (Fig. 123). This represents a relatively new alternative to conventional metering that addresses all except one of the drawbacks of energy meters listed above.
Prepayment meters require the consumers to purchase units of electricity from the electricity supplier in advance, in a similar way they purchase other energy supplies,
such as kerosene, candles, batteries, or wood. Depending on the system, the consumer purchases a magnetic card or a token or receives a payment number that, in coded form, includes some indication of the number of units (kilowatt-hours) purchased. The consumer inserts the card or token into the meter or enters the number through a pushbutton pad
incorporated on the unit. This credits the consumer meter with the number of units purchased. The meter displays the number of units available and subtracts from this number as they are used. Depending upon the design of the meter, it may also indicate a variety of other data, such as the rate of consumption and the quantity of electricity still unused. It can also provide the consumer a warning when the credits are almost exhausted.
The advantages of the prepayment meter include:
• No meter reading required.
• No billing required.
• Prepayment means no overdue accounts. Consumers who have insufficient money to purchase electricity simply do without it until they again find the necessary funds. They do not have to bear any disconnection and
Fig. 123. Prepayment meter (Source:
Conlog South Africa).
reconnection costs.
• Easy budgeting by the consumer and the ability to pay for small amounts in the same way that other energy resources are purchased.
• No consumer inquiries and complaints regarding bills.
• No problems associated with bad or non-existent postal systems or customers having no formal address at which to receive bills.
• It facilitates energy conservation as the consumer can easily relate expense to appliance usage.
• Time-of-day tariffs can be programmed into the meter and easily modified.
• It automatically disconnects the consumer if he or she is unable to pay the bill, avoiding bad feelings that may arise if the system operator disconnects the consumer.
The main disadvantages that remain or have been introduced by this new technology are the following:
• The cost of the meter and card/token/number dispenser is high.
• A well-organized sales and support service is required.
• The burden is on the consumer to go to the electricity supplier's office or shop that has been fitted with the necessary equipment to purchase electricity. The customers must therefore be within easy reach of this service as they may wish to buy cards several times each month.
• Although not a major disadvantage, customers need some training on how to use prepayment meters.
Despite the numerous attractive features of prepayment meters, the high cost of the equipment and the sophisticated support services required preclude this from being a viable alternative for mini-grid
applications. By their nature, mini-grids have too few consumers to provide an economic justification for this option.
Power-based tariff
In this case, the tariff is based on the maximum amount of power used by the consumer. The power available to the consumer is predetermined and payment is made on the basis of this power level. The simplest variation of this approach is to base the level of consumption on a written or oral agreement with the consumer (e.g., limiting consumption to no more than two 10-W bulbs and a small B&W television or paying 50 rupees (US$ 1) monthly for each light bulb installed). This approach has the clear
disadvantage that there is no way of enforcing this limit and it is therefore open to abuse.
Another variation is to electrically limit the power consumer by limiting the current into the home (p. 156). Load limiters have a number of advantages over metered connections:
• They limit peak demand and therefore prevent overloading of generators (or transformers) and the distribution lines. Consumers cannot, on their own, decide to increase their consumption.
• By preventing excess consumption by a few individuals who might consume whatever level of power they wish to use because they can afford it, use of limiters can ensure that all consumers can get access to some electricity.
• Costs associated with meter reading are removed.
• Payment is simpler for both the collector and the consumer, as the amount to be paid on a regular basis is known.
• Fraud and confusion relating to the payment process are greatly reduced.
• The payment can be required in advance to ease cash flow for the electricity supplier.
• Reliable load limiters are less expensive than reliable electric energy meters.
• Loads with low power factors (such as uncompensated fluorescent lamps) make inefficient use of available current. Excessive currents in the system lead to energy losses or the need for increased investment for additional generating and distributing capacity to more efficiently handle these increased currents. Standard electricity meters do not record usage of these excess currents. This might be seen to benefit the consumer but places extra burden on those responsible for the viable operation of the mini-grid. However, in measuring current, load limiters sense the total current used and tend to place the burden on individual consumers to improve their power factor (provided that they are made aware of how this is done). This benefits both the consumers who can effectively increase the power available to themselves at no increase in energy cost and to the utility which incurs fewer losses in the distribution line and generator.
• Load limiters encourage off-peak consumption of electricity, which is especially desirable when the "fuel" to produce the electricity is free and no storage is involved, as is the case of most micro-hydropower schemes. This encourages the more efficient use of the energy resource.
The main disadvantages are:
• Restricted electricity availability for the consumer. To encourage this option, load limiters must have a clear financial advantage over a metered supply for consumers, especially if they realize this is not the way electricity is conventionally "metered" in urban areas.
• Increased opportunities for fraud and theft by consumers tampering with the load limiters. Such tampering is difficult to detect because, unlike with a metered supply, there is no record of the quantity of electricity consumed. Automatically-resetting load limiters are an exception, since they can be mounted high on a distribution or service connection pole to deter bypassing or other types of tampering.
• Uneconomical use of electricity. Load limiters do not encourage economical use of electricity because the consumers bill takes no account of the energy consumed. They could, for example, leave lights on all the time. But these consumers using limiters generally have little disposable income and would quickly realize that leaving lights on forces them to purchase light bulbs more frequently, adding unnecessarily to their domestic expenses. Measurements in Zimbabwe (Box 9) confirm that load factors are not excessive. Furthermore, a capacity-based tariff should not be used with larger consumers, as they can easily cover the cost of the meter.
• Poor reliability. Reliability can be a problem if load limiters that cannot withstand short-circuit currents are not sufficiently protected or if the accessibility required for manual resetting leads to abuse of the load limiter.
• Poor accuracy with certain limiters. Thermal devices such as standard miniature circuit breakers and thermistors have poor accuracy, especially where there are wide variations in ambient temperature. Magnetic miniature circuit breakers and ECBs are considerably more accurate.