A contract that is a combination of fixed and variable interest rates. As a general rule, half of the interest rate is guaranteed for the duration of the agreement, similar to a fixed interest rate, and the other half of the interest rate is variable. The variable part is usually reset periodically according to market prices. This results in some protection against price increases, but some opportunity to take advantage of falling prices. This is the first article in the series and in this one we will try to explain the concept of contractual charge and how it affects the fixed costs on your electricity bill. Nowadays, many people are very tech-savvy and most have an internet connection at home. We all understand the concept of bandwidth and download limit. Bandwidth is the maximum speed at which you can maintain your connection, no matter how many computers you have at home. If you have more computers, you need more bandwidth. The contractual load for electricity is similar to bandwidth and corresponds to the maximum amount of watts allocated to a house. If you have more devices that have more power than the contracted load, the system crashes. The contractually agreed charge is also mentioned as a sanctioned charge or only as a charge (or भार in Hindi) on electricity bills. So how does this affect your utility bills? In most states, the fixed cost component in the electricity bill depends on the load.
As the load increases, the fixed costs increase. At the end of this article, we have given a table that explains how fixed costs affect different states of India. The burden also affects the minimum monthly fee in some states. The minimum monthly fee is the lowest limit on the amount of your energy costs. That said, even if you don`t use a device in your home, you`ll have as much bill. In some states, the charge also varies the electricity charges per unit on your bill. Please see our pricing article, which lists rates in different states, to see how this affects you. In this type of contract, suppliers pass on volume risk and certain spot market risks to the customer.
A customer estimates their monthly consumption based on past years and expansion plans. The supplier then enters into contracts for this amount on behalf of the customer. The customer is financially responsible for the differences between the estimated use and the actual use that the supplier has purchased for him on the spot market. This spot market buys and sells for each hour by comparing the actual consumption with the electricity purchased for that hour. When a marketer offers this type of contract, it is usually a price based on the regulated price of the utility, minus a certain amount. For example, promotional materials and contract would state that “Always 5% less than the utility” would read: “Always 5% less than the utility.” A marketer can do this by buying gas or electricity cheaper than the utility or by having significantly lower administrative costs. This is more of a purchasing strategy than a type of contract. This involves purchasing a single block of electricity (see structured block above) to cover the period of greatest electricity demand or the period when electricity is expected to be most expensive. For example, it could be the purchase of a 5 x 16 block to cover the day of the week and the time of day. Type of variable interest rate based on the amount consumed during a given period (para. B per month).
An example is a gas contract that starts at 31 cents for the first 300 m³ and drops to 29.5 cents for a use of more than 300 m³ per month. The ABM guarantees that the customer does not pay more than a fixed amount in dollars for his energy for the year. This is based on the customer`s usage behavior over the past year and adjustments to the weather. This type of contract transfers the risk of a long, cold winter to the energy marketer. This is a form of insurance for which the customer pays a small premium. If you have not signed a contract with a deregulated market participant and you are still paying the locally regulated utility for gas or electricity, you are referring to what is called grid gas or standard supply electricity. The public service is required by law to simply pass on the cost to you, adding only the administrative costs. The cost is completely variable because it is based on short-term market prices or the energy supply portfolio that the utility has purchased. See the definition of the spot market. The utility must obtain regulatory approval for tariff changes, but it can apply price increases retroactively if it can prove that the supply of energy cost it more than it charged. This is done either by an annual “acclimatization” when compensation is made, or by a supplement on gas/electricity over the next 6 to 9 months. In a market where energy prices are rising, this usually means you have to pay extra, as permits tend to lag behind the market.
In a declining market, this sometimes means a discount for you. In order to determine the contractually agreed load in the commercial connection, the engineer visits the consumer`s premises and notes the connected charge on the consumer`s application. The contracted charge in this case is 75% of the connected charge. For business relationships, the diversity factor is 75%. Indeed, it is assumed that more than 75% of electrical appliances are not used simultaneously by the consumer. The contractually agreed load is determined by the sum of the load (k) of the connected electrical equipment in the premises and types of the category (such as a commercial, industrial, agricultural household), e.B. the contractually agreed load in the domestic connection must be 50% of the connection load, just as the contractually agreed load in the commercial connection must be 75% of the connection load. Similarly, in the case of industrial and heavy connections, the contracted load must be 100% of the connection load. An electricity supplier undertakes to cover all of a company`s electricity needs at an agreed price. The supplier does not require you to purchase a fixed quantity or to purchase electricity on the spot market. This type of contract is common for private customers, but rarely for larger customers. It is also known as the “Load Following” contract.
So how is the contracted load calculated because you never chose it when you logged in? Well, it`s done by the engineers of the utility from which you connect. When filling out a form to log in, you should mention the list of devices in your home. Utilities are also conducting a “load survey” to profile specific areas in cities to learn about the lifestyle of people living in the area. Based on the information you provide on the form and profiling, they decide on the contractually agreed charge for your home. The contracted load is also adjusted periodically according to the usage (it does not decrease, but increases only if your usage pattern is higher). Another factor affected by the contracted load is the connection phase. A single-phase connection provides 220 volts, while a three-phase connection provides 440 volts. If you have a higher contract load, you will need a three-phase connection to meet the requirements. Three-phase connections have fixed costs and higher meter rents (yes, in some states you have to pay rent for meters installed at your location). . .