Following are the requirements of Tariff :- 1. It should be easy to understand to consumer. 2. Easy to calculate. 3. Tariff should be attractive i.e. It should not be too high or too low. It should be reasonable. 4. Tariff should be economical as compare to other types of energy sources. 5. Tariff should be different for different types of consumers. 6. Tariff must be fair, so that different types of consumers are satisfied with rate of electrical energy charges. 7. Tariff should be framed into two parts i.e. fixed charges + running charges. 8. Tariff should be high during peak load period. 9. Tariff should be low during off load period. 10. For industrial consumer, in addition to basic tariff incentives and penalty related to PF and LF should be considered.