Michigan · investor-owned utility
Consumers Energy: power factor rules
Demand-billed commercial and industrial customers pay a per-kVAR penalty below a 0.875 average power factor, and receive a matching credit above it.
Power-factor rule confirmed Tariffs checked 2026-10-03
Smaller customers
General Service (GS) and GSTU have no power-factor provision. GSD applies from 5 kW peak demand.
The power-factor rule
GSD General Service Secondary Demand; GP (closed); GPD Large General Service Primary Demand; GPTU; EIP; GSG-2
Applies to: GSD: secondary service, peak demand of 5 kW or more. GPD: primary service, on-peak billing demand of 25 kW or more.
How it works: The average lagging kilovar demand is compared with the kilovars that a 0.875 power factor would require. The excess is charged per kVAR, and a better power factor earns a credit. A power factor below 0.700 is not permitted, and a higher per-kVAR penalty applies after two consecutive months below it. Under GSD and GPD the adjustment does not apply when billing demand is set by a minimum or ratchet.
Formula: Penalty or credit = $1.14 per kVAR of difference from the 0.875 level ($5.25 per kVAR after two consecutive months below 0.700).
"If the average Power Factor during the billing period is less than .875, a per Kilovar penalty will be applied to the amount by which the average lagging Kilovar demand ... is in excess of that for ... .875"
Source: Consumers Energy Company Rate Book for Electric Service, M.P.S.C. No. 14 – Electric, Section D, Adjustment for Power Factor: GSD Sheet D-52.00; GPD D-61.00/62.00. GSD: November 2025 billing month; GP, GPD, EIP, GSG-2: May 1, 2026. Checked 2026-10-03; review by 2027-10-03.
Caveats
- Under GSD and GPD, the adjustment does not apply when billing demand is determined by a minimum or ratchet.
- Sheet numbers for GPTU, EIP and GSG-2 should be checked in the current rate book.
What to do next
- Size the kVAR for your load.
- Send us a bill and we'll tell you what you're paying and what correction is worth.
Cities we serve in Consumers Energy territory
Tariffs change. This summary reflects the documents cited above as checked on 2026-10-03; your utility's current rate schedule and your bill govern what you pay.