Running / Operating Charges

Running / Operating Charges

• As the name implies, running charges will depend mainly upon the
energy (in units or kWh) generated by the plant.
• Running charges includes:
• Fuel Cost
• Labor Cost
• Maintenance and Repairs Cost
• Cost of stores
• Supervision
• Taxes
Fuel Cost
• This cost, of course, varies with the type of plant. It is lower in
thermal (coal based) plants than nuclear plants. However, for
hydroelectric plants (HPS), this cost is nil.
• The cost of fuel varies with the following:
• Unit price of the fuel.
• Amount of energy produced.
• Efficiency of the plant.
Labor Cost
• Salaries of the laborers.
• Maximum labor is needed in a thermal power plant using. A hydraulic
power plant or a diesel power plant of equal capacity requires a lesser
number of persons. In case of automatic power station the cost of
labor is reduced to a great extent.
• However, labor cost cannot be completely eliminated even with fully
automatic station, as they will still require some manpower for
periodic inspection etc.
Maintenance and Repairs Cost
• In order to avoid plant breakdowns maintenance is necessary.
• Maintenance includes periodic cleaning, greasing, adjustments and
overhauling of equipment.
• This item of cost is higher for thermal plants than for hydro-plants
due to complex nature of principal equipment and auxiliaries in the
former.
Cost of stores
• The items of consumable stores other than fuel include such articles
as lubricating oil and greases, cotton waste, small tools, chemicals,
paints and such other things.
• The incidence of this cost is also higher in thermal stations than in
hydro-electric power stations.
Supervision
• Salaries of the operating staff. The higher the size (capacity), the more
the number of operating personnel required.
• A good supervision is reflected in lesser breakdowns and extended
plant life.
• The supervising staff includes the station superintendent, chief
engineer, chemist, engineers, supervisors, stores in charges, purchase
officer and other establishment.
Taxes
The taxes under operating head includes the following:
• Income tax
• Sales tax
• Social security and employee’s security etc.
• Recently added goods and service tax (GST)
Formula For Cost Of Electrical Energy
We have discussed that the total cost of electrical energy will consist of
the fixed, semi-fixed and running costs. We can hence express the total
annual cost as:
Total annual cost = Fixed cost + Semi-fixed cost + Running cost
Formula For Cost Of Electrical Energy
We know, fixed cost is constant; semi-fixed cost is proportional to the
maximum demand (kW); running cost is proportional to the energy
generated (kWh)

Total annual cost = A + B(kW) + C(kWh)

....where, A = annual fixed cost, B = a constant which when divided by

maximum demand (kW) gives annual semi-fixed cost, C = a constant
which when multiplied by the annual kWh output gives annual running
cost.
Formula For Cost Of Electrical Energy
However, sometimes, it is more convenient to include fixed costs (A)
together with semi-fixed costs (B). This simplifies the tariff scheme.

Total annual cost = a(kW) + b(kWh)

....where, a = constant which when multiplied with max demand (kW)

gives us the annual cost of the first part; b = constant which when
multiplied by the energy output (kWh) gives the annual cost of the
second part.