Towards the ‘correct’ domestic multi-part tariff

Abstract

The principle of multi-part costing and charging, first applied by Hopkinson, is found to be as sound to-day as ever it was.It is attaining particular importance once again in connection with the intensive development of the domestic thermal load. This requires the unit-charge component of multi-part tariffs to be lowered to the bare minimum. The necessary corollary (characterizing a “correct” multi-part tariff) of allocating to the standing-charge component the bulk of the actual standing costs involved in giving supply, is impracticable with conventional two-part tariffs. At present their standing-charge component covers little more than the standing costs due to the demand for lighting and small domestic appliances, which is but a small fraction of the total demand of modern domestic installations. Hence the bulk of the standing costs due to the domestic thermal load must be averaged-out on the unit-charge component.A “correct” domestic multi-part tariff has to take into account the individual consumer's demand. This becomes more and more justifiable as inter-consumer diversity grows poorer and poorer in consequence of the predominance of the space-heating load. Owing to the rigid character of lighting and cooking demands it appears to be sufficient to consider individual consumer's demand only in connection with the elastic water-heating and space-heating requirements.Tariff charges based on actual demand can be put into effect by either recording or limiting consumers' maximum demands during periods of heavy load on the general supply system. As regards the second alternative, the time-honoured “contract-demand” method can be developed to such an extent as to be capable of everything the m.d.-indicator method achieves, while obviating drawbacks inherent in the latter.Thus a “correct” domestic multi-part tariff may be found in a revival and modernization of the contract-demand method. Whether such a “correct” tariff is also an ideal one, is open to discussion. But the principle of charging domestic supplies on the basis of both consumption and demand is worth reconsidering at all events.