In some countries, volumetric charges may be complemented by fixed load charges that differentiate according to the maximum capacity that the user draws from the system. These are relevant because capacity rather than energy is the major driver of fixed costs on the power system, making it relevant to structure tariffs around the amount of load that customers draw from the system. In almost all countries in which demand charges exist, these are linear load charges per kV. They are most prevalent in industrial tariff schedules, exist in approximately half of commercial tariff schedules, but are rare among residential tariffs.

Finally, countries are increasingly considering time-of-use charges that apply multipliers to standard charges depending on whether consumption takes place during peak or off-peak periods. In reality, it is not so much total load that drives investment costs on the system, as the peak-hour load. Time-of-use tariffs are a means of reflecting this reality in customer charges. In most countries time-of-use tariffs act as linear rates that vary by time block. In the majority of countries, time-of-use blocks consist of peak and off-peak hour blocks. Less common are broader divisions into day and night times, followed by seasonal variation. Timeof-use tariffs are prevalent in 40 percent of industrial tariff schedules and can be found in a third of all commercial tariff structures. Residential users are rarely subject to time-of-use tariffs.

For each customer category, the paper reports an average effective electricity tariff per kilowatt-hour, which allows for standardized price comparisons across a wide diversity of tariff designs. The average tariff is the price per kilowatt-hour of electricity consumed for a representative consumer once all charges — fixed, volumetric, load-based and time-of-use — have been fully incorporated (Box 1) (Briceno-Garmendia and Shkaratan, 2011). This requires assumptions to be made regarding the average monthly electricity bill. For residential customers, the average electricity consumption is derived from the IEA energy balances by taking the total residential electricity consumption and dividing by the number of connected households. Since there are limited data on the distribution of electricity consumption within a given country, median electricity consumption may lie below the lifeline tariff level in more cases than implied by the analysis. As a result, the results might overestimate the average electricity tariff faced by households in certain developing countries. For non-residential customers, a “representative” consumption level is adopted based on expert consultations and the characteristics of each sector. Commercial, agricultural and public sector consumption is assumed to be 1,000 kilowatt-hours per month, while industrial consumption is set at 5,000 kilowatt-hours per month.

Similarly, assumptions were made about the representative load level for each customer group, as well as the pattern of peak versus off-peak consumption in cases where time-of-use tariffs exist. Following internal consultations, the commercial load factor was set to 11 kilovolts, while the industrial load factor was set to 33 kilovolts. In cases where customer groups were not explicitly defined by the tariff schedule, these load factors were used for categorization.

In order to apply time-of-use to a single average nominal tariff for each customer group, a weighted average volumetric time-of-use charge was computed for each customer class based on the following time zones: peak times were defined as 6pm through 10pm for commercial customers, and as 6pm through 9pm for industrial users. Day time was defined as 8am through 6pm, and nighttime as 10pm through 8am for all users. Where a choice between linear tariffs and time-of-use tariffs was presented in the tariff schedule, the option resulting in the cheapest average nominal tariff based on the user’s assumed monthly consumption level was selected.

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