The correct answer is: C. both (A) and (B)
A two-part tariff is a pricing structure in which a customer pays a fixed charge plus a variable charge. The fixed charge is typically based on the customer’s demand for electricity, while the variable charge is based on the amount of electricity the customer uses.
Variation in load factor will affect both the fixed charge and the variable charge. The fixed charge will be higher for customers with a higher load factor, because they are using more electricity. The variable charge will also be higher for customers with a higher load factor, because they are using more electricity at peak times.
Here is a brief explanation of each option:
- A. fixed charges
The fixed charge is a component of a two-part tariff that is independent of the amount of electricity used. It is typically based on the customer’s demand for electricity, which is the maximum amount of electricity that the customer uses during a given period of time.
Variation in load factor will affect the fixed charge because customers with a higher load factor will have a higher demand for electricity. This means that they will pay a higher fixed charge.
- B. operating or running charges
The operating or running charges are a component of a two-part tariff that is based on the amount of electricity used. They typically cover the costs of generating, transmitting, and distributing electricity.
Variation in load factor will affect the operating or running charges because customers with a higher load factor will use more electricity. This means that they will pay higher operating or running charges.
- C. both (A) and (B)
As explained above, variation in load factor will affect both the fixed charge and the variable charge. This is because customers with a higher load factor will have a higher demand for electricity and will therefore use more electricity.