Power factor is the ratio of real power (kW) to apparent power (kVA). Motors, compressors and older lighting ballasts draw reactive power (kVAR), which lowers power factor and forces the utility to size lines and transformers for current that does no useful work. Many commercial and industrial tariffs recover that cost with a power factor adjustment once the account falls below a stated threshold, typically between 0.85 and 0.90 lagging, though the exact figure is tariff-specific. The adjustment takes different forms: some tariffs scale billed demand up by the ratio of the threshold to the actual power factor, others bill kVAR or kVARh above an allowance, and others bill demand in kVA rather than kW. Errors arise when the billing system uses a threshold from another schedule, reads a kVARh register with the wrong multiplier, averages power factor over the wrong intervals, or keeps billing a penalty after the customer installed capacitor banks that brought power factor above the threshold.
How it happens
- The billing system applies a threshold from a different schedule or an outdated tariff version.
- The kVARh register is read with a different multiplier than the kWh register after a meter exchange.
- Power factor is calculated at the moment of peak demand when the tariff specifies the billing-period average, or the reverse.
- The penalty keeps posting after capacitor correction because the meter was never reprogrammed to record the improvement.
- Leading power factor from an over-corrected capacitor bank is penalized under a tariff that only adjusts for lagging power factor.
How to detect it
- Recompute power factor from the bill's kWh and kVARh (PF = kWh divided by the square root of kWh squared plus kVARh squared) and compare it to the printed figure.
- Confirm the threshold and the adjustment formula in the tariff sheet for the account's exact schedule.
- Check that the kWh and kVARh registers carry the same multiplier.
- Compare penalty amounts before and after any capacitor installation or meter work.
Evidence the utility will accept
- Bills showing kWh, kVARh or kVA, power factor and the adjustment line
- The tariff provision defining the power factor threshold and formula
- Meter register or interval data including reactive power channels
- Installation records and a power quality study for any capacitor banks
Recovering the overcharge
We file a dispute showing the recomputed power factor and adjustment for each month, the tariff threshold, and any register multiplier mismatch, and request rebilling for the back-billing period. When the cause is metering, we ask the utility to test or reprogram the meter so the correction carries forward. Where the penalty is legitimate, we report the kVAR needed to clear the threshold so facilities can price a capacitor bank.