WIRC Bulletin - February 2019

Power of Electricity expenses

Power of Electricity expenses by CMA Nikhil Pawar


From Household to industries consumption of electricity expenses is important subject. Without electricity life is dark. The monthly electricity charges need to be pay within due date or before due date (to avail prompt discount). Automatic ECS options is also provided nowadays.

Objective: – By this article I am trying to focus on some terminologies and MIS formats to understand and to have control over electricity expenses. Because, in Industry many cost accountants are working and some of them have to record this expense for audit purpose also.

How to reduce Electricity expenses:-

  • Prompt Discount: – On first page of electricity bill, you may find 3 figures like.
  1. Bill date ###         Bill Amount ###
  2. If paid upto ###   Bill Amount### (Focus on this amount to avail prompt discount)
  3. If paid later ### Bill Amount (Try to avoid wait till this date)

Note: – In many companies, I have observed that they simply ignore to pay bill due to same is not verified or confirmed by Concerned person or department)

  • Security Deposit Held: – This deposit amount is average of your last 12 month billing amount. The electricity board pays your simple Interest on the same in the month of April.

Note:- (Accounting entry need to be considered for Interest received on Security Deposit)

  • State wise subsidy for Industries is also there. (besides prompt discounts) Refer your bill more details.
  • Electricity Duty is charged on “Aggregate amount of

Demand Charges …

Add:- Wheeling Charges…

Add/Less:- TOD tariff EC


Total: ——–

(Different duty rates are exists like 9.3%, 16% and 21)

  • Consumption type is also provided on electricity bill. The unit rate will vary from consumption Type:-

Industrial Rs.7.1 per unit

Residential Rs.5.73 per unit

Commercial Rs.11.5 per unit (Highest rate)

  • Time of the day Zone (TOD):-
Chart Rate Units Charges Rs.
0000 Hrs -0600 Hrs & 2200 Hrs-2400 Hrs -1.50 1000 -1500
0600 Hrs -0900 Hrs& 1200 hrs-1800 hrs 0 50 0
0900- hrs-1200 Hrs 0.8 2500 2000
1800 Hrs-2200 Hrs 1.100 800 880

Note:- If Net figure is positive it means you have to pay TOD tariff EC and if the same is negative your will get incentives. Try to understand above time zone to conduct maximum tasks in given time frame if possible.

Above mentioned rates are extra than units rates per unit.

  • Power Factor: – It is a ratio between actual work that you get and total energy supplied by the utility.

Important figure to change your electricity bill amount.


Formula: – KWH/KVAH

Example: – 30212/30270

= 0.999

If PF is good then you will get PF incentive. On the contrary if it is unfavourable you will be charged penal charges.

(For more details one can refer High Tension Tariff Booklet issued by respective electricity Board.)

Following are the solutions to save electricity and ultimate cost saving.

  1. Install Automatic power factor controller.
  2. Use of LED lights. Install Solar panel.
  3. Conduct Energy Audit once in a year.
  4. High power consumption process running in night shift. If possible.
  5. PIR Occupancy sensor for less occupied area.(PIR – Passive Infrared Sensor)


Month Previous reading Current reading KWH Unit Total Current Bill Delay Charges Net Amount


Note: – Same data is useful for cost audit.


Period Production in kg Units Amount Per unit Rate Rate per kg Remark


“Save energy today to better survive tomorrow”.

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