Power-Factor Charges

Author: E.E. Kimberly

A consumer having a maximum demand of 100 kw with 100% power factor would pay the same demand charge as if he had a power factor of say 50%. But the kilovolt-ampere capacity in generating and distributing equipment required by a 100-kw load with 50% power factor is approximately two times as great as that required for 100 kw with 100% power factor. Therefore, in addition to the demand charge, there must be a penalty charge against low power factor to distribute equitably the fixed charges of the capital investment.

The actual methods used in applying the penalty for low power factor are quite diverse, and may best be studied through reference to the actual examples of power contracts shown in the latter part of this chapter. Inasmuch as most industrial electrical power apparatus draws from the power line some lagging reactive volt-amperes, the electric power utilities welcome loads which take leading reactive volt-amperes in any amount up to total compensation. It is sometimes possible to arrange a power contract whereby the consumer is given a premium for maintaining a leading power factor within certain specified limits, in order to compensate for some of the lagging reactive kv-a of other nearby consumers. The economics of power-factor correction will be further dealt with in Chapter 25.

The demand meter is read directly in kilowatts. In some instances the demand is determined in kilovolt-amperes, instead of kilowatts, in the belief that the former is a more accurate measure of the investment in physical equipment than is the latter.