An electricity tariff is only one line in the power bill

The tariff printed by a utility is a price for defined electricity service. A factory buys usable power. Between the two sit demand charges, taxes, connection assets, power quality, backup fuel, maintenance and lost production.

The International Energy Agency estimates that about 600 million Africans lack reliable electricity access and identifies unreliable supply as a barrier to industrial value chains. That figure gives regional scale. A company's bill must be rebuilt from its meter and operating record.

The meter starts the calculation.

Reconstruct the utility invoice

Start with interval consumption where the meter provides it. Apply energy rates by time band, maximum-demand charges, fixed charges, power-factor penalties, levies and taxes under the current tariff schedule. Reconcile the reconstruction to the utility invoice before using it for investment, and preserve unexplained differences as a separate line. Meter multipliers, estimated readings, tariff transitions and billing corrections can otherwise look like operating improvement or deterioration when no machine changed.

Maximum demand can be set by a short peak. A plant that starts several motors together may pay for that peak through the billing period. Staggered start-up or controls can reduce it if production and safety permit.

Power factor reflects how equipment uses current and can trigger penalties or require correction equipment. The engineering team should verify readings rather than let finance treat the charge as a tax.

Connection and transformer assets may be paid upfront, leased or maintained by the customer. Spread capital over the period used for internal decisions, while preserving the initial cash requirement.

Add every backup source

For diesel or gas generation, record fuel volume, delivered price, generator output, service, oil, parts, operators and storage loss. Divide by usable output, not generator nameplate.

Generators can run inefficiently at low load. Several smaller units may match demand better and increase maintenance. A large unit can simplify operation and create a single point of failure.

Batteries carry purchase, financing, inverter, cooling, degradation and replacement. State usable capacity and cycling assumptions. Solar output needs actual production, cleaning, inverter replacement and curtailment.

A hybrid control system has a cost and can reduce fuel. Verify savings against metered baseline and production. Weather or a shutdown can lower fuel without an efficiency gain.

Price the interruption

Log each event with start, end, affected process, work in progress, restart time and output lost. Separate utility outage, internal electrical fault and planned maintenance.

A one-hour outage can cost more than one hour of production. Continuous processes may discard material and clean equipment before restart. Cold storage can tolerate a short interruption and lose stock after a longer one. Use process evidence.

Value lost output at contribution after avoidable variable cost, not selling price. If demand was insufficient to sell the units, the loss differs. Add damaged material, overtime, expedited delivery and customer penalties where documented.

Employees paid during downtime remain a cash cost. Their wages should not also be counted inside a contribution measure that already includes labour unless the method intends it.

Include quality failures

Voltage dips and frequency events can stop controls or damage equipment without a reported outage. Install monitoring where the loss justifies it. Match events to machine logs and product rejects.

Poor quality can shorten asset life. A repair record can show repeated boards, motors or drives. Attributing every failure to the grid needs technical evidence.

Protection and conditioning equipment cost money and can prevent larger loss. Compare avoided incidents cautiously; a counterfactual is not observed cash. Use historical events and engineering probability with assumptions.

The utility may have a claim process. Record notice deadlines, evidence and compensation limits. Expected recovery should not fund operations before acceptance.

Turn cost into a unit measure

Add utility invoice, self-generation, energy-system maintenance and measured interruption cost. Divide by saleable output for the same period. If product mix changes, calculate energy by line or use an allocation method.

A lower cost per unit can result from higher utilisation rather than a cheaper supply. Show total power cost, units and cost per unit together. Seasonal plants need comparable periods.

For service businesses, divide by a meaningful driver such as occupied room-night, compute workload or operating hour. Avoid allocating a building bill equally to teams with different equipment.

Compare sites under the same method. A low tariff and weak reliability may cost more than a higher tariff with stable service.

Use the bill to choose investment

Demand control, efficient motors, insulation, solar, storage and process changes compete for capital. Calculate cash outlay, operating change, maintenance, useful life and production effect. Include finance and currency for imported equipment.

An efficiency project can reduce energy and leave demand charges unchanged. Solar can lower daytime purchases without covering an evening peak. A battery can reduce peaks or outages, and the same capacity cannot be assigned twice without dispatch modelling.

Run downside cases for lower utilisation, fuel price, delayed commissioning and equipment replacement. A vendor's simple payback should be reproducible from plant data.

Reliability investments may protect revenue rather than reduce the utility bill. Their case belongs in avoided downtime under a transparent baseline.

Report what management can act on

A monthly energy page should show output, grid energy, backup energy, demand peak, outage and restart hours, damaged output, total cash power cost and unit cost. Add the largest event and assigned action.

Do not reward a manager for cutting maintenance that lowers this month's cost and raises failure risk. Track overdue preventive work and equipment availability.

The published tariff remains important for procurement and policy. It is one line. The factory's usable-power bill ends after the product leaves the line.

Sources

• International Energy Agency, 6 October 2025: Stepping Up the Value Chain in Africa