Is Your Power Factor Causing a Utility Bill Increase?

In order to always provide the electricity required of consumers and to maintain electric grid reliability, utilities need to know a company’s peak electric demand. When turning on a facility, whether it is starting up a manufacturing line, building air conditioning, or a compressor for snowmaking, electricity is demanded at a given rate. In most cases the initial electricity required to start up the system exceeds the amount of electricity needed to keep the system running.

On your company’s electric utility bill there are two types of demand recorded; kilowatts (kW), which is the amount of power that is being used (real power), and kilovolt-amps (kVA), which is the ‘apparent power’ of the system.

If a company is using power inefficiently, it will have a negative effect on their power factor (the ratio of real power to apparent power). An inefficient power factor will increase a client’s utility bill because the power factor will cause the kVA demand to be higher than the kW demand. Also Power factors less than 90% (ratio of kW/kVA) within some utilities will cause an additional increase in the demand cost.

Recently, on one of our client’s electric utility bills, we identified that the kVA was greater than the kW; meaning that the client had a poor power factor. Since the client had already optimized their building system, capacitors could be installed on some of their equipment to raise the power factor. By accumulating and holding electricity, capacitors increase a system’s carrying capacity, which raises the kW power factor and reduces kVA demand. In essence, you are able to increase the kW load without affecting the kVA. Once the power factor is increased, kW demand should increase above kVA demand, and the utility will begin calculating demand charges on the kW rather than the kVA.

If you aren’t sure if your demand is being billed based on your kW or kVA, Usource can analyze your utility bills to see if savings can be achieved.

About the Author

Jesse Ram has eight years of experience in analyzing large datasets, evaluating energy programs and developing reports. Prior to joining Usource, he was a consultant with Conservation Services Group and NMR Group.

View Jesse's Bio
Author image

Go to All Posts