Role of Energy Losses in Tariffs

//Role of Energy Losses in Tariffs

Role of Energy Losses in Tariffs

Energy Losses in TariffsThe supply of electricity for all environments (residential, industrial, commercial, etc.) is not an easy task. In fact, it is the result of a total of activities that begin with the generation of it by converting natural resources such as water, gas, sunlight or wind into electricity, which is transported by transmission and distribution networks to finally transform into energy with adequate levels for commercialization.

Thus, producing, transmitting, distributing, marketing and managing are fundamental stages in the electricity service since each of them generates expenses that must be quantified to determine prices.

On this basis, the tariff structure is determined, which is nothing more than identifying the cost of the service and the price charged to each subscriber for bringing electricity to their home. Likewise, the administration of the interconnected system generates costs that are added to the calculation of the Unit Cost (CU) of service provision.

Obviously, it is a much more complex process, so much that it can generate significant losses (technical and non-technical), corresponding to the difference between the total amount of energy generated and the total consumed by end users.

As is known, the technical losses are those that occur due to the technical or physical condition of the equipment and infrastructure of the distribution networks; while the non-technical correspond to the theft of energy and the inefficiency of the systems of control, measurement, billing and collection of the companies.

How do these losses affect the pocket?

Although it may not seem like it, this is a cross-cutting issue for all businesses, because the loss of this resource, in most countries, the charging of a regulated tariff or a value for each kW / hour that is marketed is implemented.

A fraction is allocated from this regulated tariff to replace part of the electric losses that are presented, which means two things: the companies that generate, transmit, distribute and commercialize the energy will see the percentage of their profits diminished and, consequently, the end customer will also end up paying for these components.

High-Efficiency Transformers

Why? Because the payment of the electricity that a user receives in his home depends on the cost to produce that energy, as well as on the operation and administration of the system. For example, in the Colombian case, the Energy and Gas Regulation Commission (CREG) takes into consideration the following elements to establish the rates:

  • Fixed costs generated by the marketing activity
  • Cost of energy purchase made by the marketer
  • Transport of said energy from the plants where it is generated to the regional transmission networks
  • Value of the energy transport of each substation belonging to the National Transmission System to the end user
  • Remuneration of the marketing margin of energy, including essential aspects such as customer service, claims, billing and reading of meters
  • Costs for services and restrictions associated with generation

At the same time, in Latin America the tariff measures tend to be similar; In Mexico, the Energy Regulatory Commission (CRE) also seeks to cover the financial needs, the coverage of the service and to promote the rational consumption of energy.

Mexican rates are adjusted taking into account and independently the items of supply voltage, application schedule, demand charges, consumption or initial contracted demand and the start date of the period, mainly.

In Argentina, on the other hand, although users pay a single invoice paid to the distributor, in addition to VAT (which is the main tax included in the rates), remuneration is included for only three specific activities: generation, distribution, and transportation of energy.

Efficiency indicator

In his study entitled The Colombian electricity sector: description, current situation, challenges and prospects, the economist Luis Guillermo VĂ©lez points out that energy losses are considered an indicator of efficiency.

It emphasizes that, before the reforms implemented in the nineties, the control of losses was one of the main concerns for those in charge of the electricity sector. The financial viability of the companies and the industry as a whole encountered a serious obstacle, due to the high energy indices that were produced, but were not invoiced.

This problem also affected the need to generate more energy in order to reach the subscribers of the service. However, by modifying the competitive model, the situation has also changed and companies are now careful to have large losses.

Electrical Relay Repairing Services

The amount of these falls into the cost structure, but always within reasonable margins, given that the regulation penalizes excessive waste. Thus, the implementation of highly conductive materials represents an effective way to counteract the electrical resistance, reduce losses and increase the efficiency of the system.

Technology Platforms

Another global trend to reduce losses is to shorten the distance between the generation site and the consumer. Likewise, through technological tools it is possible to report the technical and non-technical failures of electricity networks and energy users.

Through an analysis, a broad list of electrical parameters such as voltages, sockets and channels is defined to generate energy balances, single-line diagrams and reports that provide a clear view of electrical structures. This is a reference for various companies in the sector that need to focus on controlling and detecting losses early, as well as imbalances, which allows taking corrective and preventive actions with an effective recovery plan.

By | 2018-02-09T11:55:27+00:00 January 24th, 2018|Energy|0 Comments

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