Towards the `correct¿ domestic multi-part tariff

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 discus- sion. But the principle of charging domestic supplies on the basis of both consumption and demand is worth reconsidering at all events.