Eko Power Cost Reflective Tariffs
In short
Eko Power Cost Reflective Tariffs are electricity pricing models where the cost of power changes based on the actual expense of producing and delivering it. This system ensures that the utility company can cover its operational costs through consumer bills.
In plain words
Instead of having a fixed price, your electricity bill changes when it becomes more or less expensive to make power. If fuel costs go up, your tariff usually goes up too. This helps keep the energy system stable.
A simple example
If the price of natural gas used to run a power plant rises significantly, the cost of electricity for households increases to match that change.
Why it matters
It prevents energy companies from going bankrupt due to sudden price spikes in fuel. It also encourages people to use less power when it is most expensive to produce.
Easy to mix up
Do not confuse this with a fixed-rate tariff, where the price stays the same regardless of market changes.