Is Your Power Factor Causing a Utility Bill Increase?

July 21, 2021

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Your power factor is a measure of how effectively electricity is consumed at your facility. In order for a utility supplier to always provide the electricity required of all energy users, and to maintain electric grid reliability for all energy consumers, the supplier needs to determine each property’s peak electric demand. Whether it is powering a manufacturing line, heating and air conditioning, or running large compressors for snowmaking, electricity is demanded at a given rate for each. In most cases, the initial electricity required to start a system exceeds the amount of electricity needed to keep that system running. Understanding how the energy choices you make will impact your power factor can help you lower energy costs and improve energy efficiency.

Your company’s electric utility bill shows two types of demand; kilowatts (kW), which is the amount of ‘working power’ or ‘real power’ that is actually being used by a facility, and kilovolt-amps (kVA) the ‘apparent power’ or ‘demand’. Your power factor is the ratio of real power to apparent power (ratio of kW/kVA). An inefficient or low power factor, with the kVA demand being higher than the kW usage, can require a utility to install or purchase additional electric capacity in order to deliver a higher electric current to supply electricity loads.

Understanding your power factor can be confusing and it is easy to overlook if you aren’t sure what to look for when assessing your utility bills. Recently, while reviewing one of our client’s electric utility bills, we noticed 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 systems, we thought it would be beneficial for the client to install capacitors on some of their equipment to improve their 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. By understanding their power factor and making prudent adjustments, our client quickly saw improvements.

If you aren’t sure if your demand is being billed based on your kW or kVA, Usource can analyze your utility bills to determine if there are opportunities for savings. Click here to request a complimentary utility bill review. 


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