Power factor: the penalty on motor-heavy sites

What it measures

Inductive loads — motors, transformers, fluorescent ballasts, welders — draw current that does no useful work but still has to be delivered across the utility's infrastructure. Power factor is the ratio between the power doing useful work and the total power being delivered.

powerFactor = realPower (kW) / apparentPower (kVA)

A perfectly resistive load has a power factor of 1.0. A site with substantial motor load might run at 0.75 to 0.85 without correction.

How the penalty works

Where a tariff includes a power factor clause, the usual mechanism is to gross up billed demand when power factor falls below a threshold:

adjustedKW = billedKW x (threshold / actualPowerFactor)

At a 0.90 threshold, an account running at 0.80 has its billed demand increased by 12.5 percent. That applies to the demand charge every month it persists.

The threshold and the mechanism vary by utility and rate schedule. Some use a different formula, some apply a separate kVA charge instead, and some have no power factor clause at all. Read your own tariff.

Finding it on a bill

Look for a power factor percentage or ratio, often near the demand section. If present, compare it to your tariff's threshold.

If your bill shows a kVA figure alongside kW, you can compute power factor yourself by dividing kW by kVA. If neither appears, the account may not be metered for it, in which case no penalty applies.

What corrects it

Power factor correction is usually an equipment question rather than an operational one. Capacitor banks are the conventional answer, sized to the site's reactive load, sometimes automatically switched to track varying conditions. Variable frequency drives on large motors also help, and modern drives generally present better power factor than the fixed-speed motors they replace.

This is a capital decision with a calculable payback: the avoided penalty against the installed cost. It is one of the few energy interventions where the return can be computed with real confidence in advance, because both the penalty formula and the correction are deterministic.

One caution worth flagging: over-correction is possible and some tariffs penalise leading power factor as well as lagging. Sizing should be done by someone competent to do it.

Common questions

What is power factor on an electricity bill?

The ratio of real power in kilowatts to apparent power in kilovolt-amperes. It reflects how much of the delivered power is doing useful work, and many commercial tariffs penalise accounts below a threshold.

What is a good power factor?

Tariff thresholds commonly sit between 0.90 and 0.95. Sites with significant uncorrected motor load may run lower. The applicable threshold is stated in the utility tariff.

How do I improve power factor?

Typically with capacitor banks sized to the site’s reactive load, and with variable frequency drives on large motors. Sizing should be done competently, since over-correction is possible and some tariffs penalise leading power factor.

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