Power factor & kVAR
Power factor correction, explained honestly
Low power factor costs some facilities real money every month, and costs others nothing on the bill. Here is how to tell which you are, and what correction is actually worth.
kW, kVAR and kVA: the power triangle
Equipment such as induction motors, transformers and welders needs two kinds of power. Real power (kW) does the work: turning shafts, making heat and light. Reactive power (kVAR) builds the magnetic fields those machines need. It flows back and forth every cycle instead of being used up. The wires, transformers and switchgear have to carry both, and the combination is apparent power (kVA):
kVA² = kW² + kVAR² and power factor = kW ÷ kVA
Example: a load drawing 80 kW of real power and 60 kVAR of reactive power draws √(80² + 60²) = 100 kVA, a power factor of 0.80. Supply the 60 kVAR locally with capacitors, and the utility only has to deliver 80 kVA for the same work.
Reactive power is not "wasted energy" on your energy meter. Ordinary kWh metering doesn't charge you for it. What it does is increase current, and current is what heats conductors, fills transformers and, on some tariffs, drives a power-factor charge.
Displacement power factor vs true power factor
The triangle above describes displacement power factor: the phase shift between voltage and current at the fundamental frequency (60 Hz). Capacitors correct that. Many modern loads, like variable-frequency drives, LED drivers and UPS systems, draw current in pulses. Their displacement power factor can be close to 1 while their true power factor, which includes harmonic current, is lower. Capacitors do not fix harmonic current, and in the wrong place they can make it worse (see harmonics and IEEE 519). So it matters which "power factor" your bill or meter reports.
Who actually pays for low power factor?
It depends entirely on your utility and rate schedule. From the tariffs we reviewed for the Midwest (October 2026):
- Many smaller and mid-size commercial customers pay nothing extra. ComEd's delivery ratebook has no power-factor, kVAR or kVA billing adjustment (retail supply contracts can have separate terms). No adjustment was found in the reviewed We Energies secondary schedules or MGE general-service schedules. For Alliant Wisconsin, the reviewed Cp-1, Gd-1 and Cg-2 time-of-day schedules contained no provision, but its General Rules were not checked.
- Large customers often do. Examples: We Energies' primary-voltage schedules adjust billed demand around 85%; WPS adds a reactive demand charge for customers over 1,000 kW.
- Some utilities apply it at ordinary sizes. Consumers Energy charges per kVAR below a 0.875 power factor from 5 kW peak demand on GSD; Rochester Public Utilities scales billing demand below 0.95 from 25 kW; St. Charles, IL adjusts below 0.85; NIPSCO adjusts large general service below 80%.
- Some can require correction instead of charging. ComEd can require correction to 85% lagging, and Naperville requires 95–100%.
Look up your utility's rule, with the tariff quote and source. Or send us your bill and we'll read it for you.
When correction pays even without a penalty
Correcting power factor lowers the current between the capacitors and the source. That can be worth doing for reasons that never appear as a line on the bill:
- Capacity. At 0.80 power factor, 500 kW needs 625 kVA; at 0.95 it needs about 526 kVA. That frees roughly 99 kVA of transformer and switchgear capacity, which can avoid or defer an upgrade before a line expansion.
- Losses. Resistive losses scale with current squared. Going from 0.80 to 0.95 cuts current by about 16% and the I²R losses in the feeders upstream of the capacitors by about 29%. That's usually a modest share of total energy, but it's real.
- Voltage. Less current means less voltage drop on long or heavily loaded feeders. That helps motor starting and sensitive equipment.
- Utility requirements. If your utility can require correction (ComEd, Naperville), doing it on your schedule beats doing it on theirs.
Sizing capacitors
For a steady load P (kW) moving from power factor p₁ to p₂ (both lagging, displacement):
kVAR needed = P × [tan(arccos p₁) − tan(arccos p₂)]
Example: 500 kW from 0.80 to 0.95 needs about 211 kVAR. Try the calculator. Real plants don't run at one load, so a practical bank also accounts for:
- The load range. Fixed capacitors sized for full load over-correct at light load. Automatic banks switch steps in and out.
- Where to connect. At a large motor (switched with it), at a distribution panel, or at the service entrance. Capacitors switched with a motor should not exceed what the motor manufacturer allows, so the motor can't self-excite when it's disconnected.
- Harmonics. Measure first if you have drives or other electronic loads (below).
- System voltage and switching transients, particularly with drives that can trip on overvoltage when capacitor steps switch.
Standard vs detuned capacitor banks
| Type | What it is | Use when |
|---|---|---|
| Standard (non-detuned) | Capacitors only, fixed or switched in steps. | Harmonic levels are low and a resonance check shows no problem. |
| Detuned | Each capacitor step has a series reactor selected to place its tuning frequency below the lowest significant harmonic. Common designs tune below the 5th harmonic (often around the 3.8th–4.2nd); significant 3rd harmonics can require a different design. | After checking the harmonic spectrum, network impedance, capacitor duty and every relevant switching configuration. |
| Harmonic filter | A passive tuned filter or active filter designed to reduce harmonic current. Passive filters also supply reactive power; active filters may provide reactive compensation within their ratings. | Harmonic current itself must come down, for example to meet a limit at the point of common coupling. |
A detuned bank is about moving resonance away from the harmonics present while correcting power factor. It is not a guarantee of harmonic compliance, which depends on the whole installation (see IEEE 519).
Leading power factor: too much correction
If capacitors supply more kVAR than the load needs, typically at night or on weekends when motors are off but fixed capacitors stay on, the power factor becomes leading. Effects include higher voltage at light load and stress on equipment. Some utilities treat leading power factor as a problem too: Rochester Public Utilities' tariff requires customers to prevent it, while NIPSCO's Rate 624 treats leading as unity. Automatic switching and correct sizing avoid it.
Where to start
- Find your utility's rule and check whether your schedule has one.
- Look at 12 months of bills for demand, power factor or kVAR lines, or send them to us.
- If you have drives or a lot of electronic load, measure before you buy capacitors.
Working with us
Send us your bills and any measurements you have. Our engineers will tell you what they show, and what they can't, about whether correction is worth doing. When it is, we design the correction panel and build it in our UL 508A shop. From the bill to the fix →