Billing
Power Factor
Definition
A measure of how efficiently electrical power is being used, expressed as a ratio between 0 and 1 (or 0%–100%). It is the ratio of real power (kW, doing useful work) to apparent power (kVA, total power drawn from the grid). Most utilities require commercial customers to maintain a power factor above 0.85–0.95.
Why It Matters for Your Business
A low power factor means your facility is drawing more current than necessary to deliver useful work, causing reactive power charges on your bill and straining electrical infrastructure. Power factor correction capacitors can improve efficiency and eliminate surcharges.
Frequently Asked Questions
What causes low power factor?
Inductive loads — motors, transformers, HVAC compressors, fluorescent lighting ballasts — all cause low power factor. Variable frequency drives and power factor correction capacitors mitigate this.
Do all utilities charge for poor power factor?
Not all, but many large commercial/industrial tariffs include power factor penalties or reactive demand charges. Check your rate schedule for "kVAR" or "reactive demand" line items.