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How is the electricity tariff determined?
There are two key components of the electricity tariff - fuel cost and non-fuel cost. The fuel cost component for each quarter is calculated using the average of daily natural gas prices in the first two-and-a-half month period in the preceding quarter.
The non-fuel cost component reflects the cost of generating and delivering electricity to homes. It comprises mainly the grid charge, and the capital and operating costs of generation companies. There is a time lag in the gas price reflected in the electricity tariff because changes in gas prices in the current quarter will only be taken into account in the next quarter's tariff.
This means that any increase or decrease in gas prices in the current quarter will only be reflected in the next quarter’s tariff. Refer here for more information.