There are objectives in tariff system as:
Equal distribution of cost :
- The most important objectives of the tariff are the fairly equal distribution of the cost of energy supply to different classes of users.
- Charges to be applied for consumption should be justification for each category of use.
Recovery of capital investment:
- Utility invests hugs amounts money in the system right from the generation to serve the energy in the consumer premises.
- Recovery of the cost incurred in all elements of power system i.e. Generation, Transmission and Distribution of Energy.
Recovery of running cost:
- Apart from the initial cost, it demands some costs to keep the system healthy in running condition.
- Recovery of the cost incurred in operation and maintenance and supply of equipment.
Recovery of miscellaneous cost:
- Distribution of energy to be the consumer involves many associated services in addition to only supply.
- Recovery of cost invested in miscellaneous services such as,
- Cost of metering equipment
- Cost of the collection
Concluding a satisfactory return on the total investment is an ultimate objective.