Is Your Power Factor Causing a Utility Bill Increase?

To always provide the energy required by energy consumers and maintain the reliability of the electrical grid, utility providers must know the maximum energy demand of the company. When power is supplied to a facility, whether it is powering the production line compressors, air conditioning, or facility snowmaking, it demands electricity at a certain rate. In most cases, the initial power required to start the system exceeds the amount of power required to run the system.

There are two types of demand registered on your company’s electricity bill; Kilowatts (kW), which is the energy used (real power), and kilovolt-amperes (kVA) or the ‘apparent power’ of the system.

If an organization uses energy inefficiently, it has a negative effect on its power factor (the ratio of real power to apparent power). Inefficient power factor increases the customer’s utility bill because the kVA demand for the power factor exceeds the kW demand. In addition, power factors below 90% (kW / kVA ratio) in some utilities cause a further increase in the cost of demand. This can be confusing and easy to ignore if you don’t know what to look for when calculating your utility bills.

Recently, when reviewing one of our client’s electric utility bills, we noticed that kVA is greater than kW; It means that the customer has a low power factor. Since the customer has already optimized their building system, we think it would be beneficial for the customer to install capacitors in some of their devices to increase the power factor. By accumulating and holding electricity, capacitors increase the charging capacity of the system, increasing the power factor in kW and reducing the demand for kVA. In short, you can increase the kW load without affecting the kVA. Once the power factor increases, the kWA demand rises above the kVA demand and the utility company begins calculating the demand charges in kW over kVA. 

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