Real cost of Utility power – save money with Solar!

Electricity bill is one the most boring piece of paper you would ever look at. It is a melting pot of technical jargon and numerical data. This is supposed to capture how much you will be charged for the month’s electricity consumption.

For some monthly electricity bill is just one of the many bills to be paid every month. For others it is a source of worry as it reflects the spiralling costs threatening to affect their business or lifestyle. Few people may even dread it, and definitely no one looks forward to it.

So why are we talking about the seemingly mundane and borderline irritating utility bill? One thing is certain; in today’s age electricity has become a basic necessity of life.

Interestingly though unlike consumer electronics like mobile phone et al., electricity is more of a commodity taken for granted. You worry about it only either in its absence or when you feel the monetary pinch. And I think most people will agree when I state it is not user friendly. Testament to this statement is existence and popularity of sites like bijlibachao.com.

Coming back to the starting question – why is it required to understand the bill?

It is important to know what is the actual tariff you are being charged at. Only then a proper comparison with cost of solar energy can be made. Essentially it is one of the fundamental decision making criterion.

There is no standard billing format among power distribution companies. Since focus of this article is on Maharashtra, I am taking MSEB (Mahavitran/MSEDCL) as an example.

Electricity Bill - MSEB, Commercial Connection

Sample MSEB bill: LT-II(c) (Commercial Connetion)

MSEB bills consists of two types of charges –

  • Fixed or Demand charge
  • Variable – based upon consumption

The fixed charges are based on the sanctioned load connected at the premises. Basically it is governed by the size and amount of electrical equipment that are being run on a regular basis. For example, LT-II customer with more than 50kW of connected load will have to pay Rs. 220 per kVA per month. i.e. for 60kW, it amounts to 60×220 = Rs. 13,200 per month. I will digress to the variable section as it is trickier and more relevant when a comparison with solar has to be made.

The bill specifies something called base tariff. This is typically determined by type of consumed, connected load and units consumed per month. Ex. For LT‑II(c) customer the base tariff is Rs. 13.1 per unit. Lot of people mistakenly think that this is the tariff at which their bill is calculated. However, there are several additional components that get added on this number. Here is the list and values for LT-II(c) category.

  • Tax on Sale (TOS): 0.0904 per unit
  • Fuel Adjustment Charge (FAC): 1.7164 per unit (Nov’ 2015)
  • Time of Day (TOD):
    • 2200-0600: -1.5 per unit
    • 0600-0900: NA
    • 0900-1200: 0.8 per unit
    • 1200-1800: NA
    • 1800-2200: 1.1 per unit
  • Electricity Duty (ED): 21%

TOS, FAC and TOD are calculated per unit. Therefore they can be directly added to the base tariff. This means tariff becomes:

13.1+0.0904+1.7164+1.1 = Rs. 16 per unit (assuming TOD slab of 6 pm to 10 pm)

The electricity duty, expressed as a percentage, is applied on cumulative value of tariff. Thus the tariff charged to the customer becomes-

Actual Tariff = 16*1.21 = Rs. 19.37 per unit !

This is almost 50% higher than the base tariff or in other words almost 1.5 times!

Compare this to cost of solar power that lies in the range of Rs. 5-7 per unit. The savings one can make are fairly evident. Thus it is extremely important to understand and work out the actual tariff from the information stated in your electricity bill.

Hope you found this article informative. And now you will be able to better understand your utility bill. If there are any questions, feel free to post them as comment below.

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