Indiana · investor-owned utility
NIPSCO: power factor rules
NIPSCO adjusts billing demand for power factor on its larger commercial and industrial rates: up below 80% and down above 90% on Rate 624, with other rules on specialized and very large rates.
Power-factor rule confirmed Tariffs checked 2026-10-03
Smaller customers
Rate 623 General Service Medium has no power-factor provision.
The power-factor rule
Rate 624 General Service Large
Applies to: Minimum billing demand 50 kW, up to 25,000 kW. Power-factor metering may be omitted below 300 kW.
How it works: Billing demand rises 1% for each 1% the average monthly power factor is below 80% lagging, is unchanged from 80% to 90%, and falls 1% for each 1% above 90%. Leading power factor is treated as unity.
Example: Illustration: at a 75% average power factor, billing demand is 5% above maximum demand; at 95%, 5% below. Illustration, not a bill estimate; billed demand, measurement intervals, minimums and credits determine the actual adjustment.
"If the Average Power Factor for the month is less than eighty percent (80%) Lagging, the Billing Demand ... shall be the Maximum Demand increased at the rate of 1% for each 1% ... below eighty percent"
Source: NIPSCO IURC Electric Service Tariff, Original Volume No. 16, Rate 624, Second Revised Sheet No. 61. Effective March 1, 2026. Checked 2026-10-03; review by 2027-10-03.
Rate 625 Metal Melting (500 kW contract and up); Rate 626 Off-Peak (200–15,000 kW)
Applies to: As listed.
How it works: When the power factor is below 95% lagging, demand is scaled by 0.95 divided by the power factor for the same half-hour interval. No credit.
Formula: Corrected demand = demand × 0.95 / PF (same half-hour interval).
"For Power Factors of less than ninety-five percent (95%) Lagging, the applicable Demand shall be corrected by multiplying said Demand by .95 and dividing by the Power Factor for the same half-hour interval"
Source: NIPSCO IURC Electric Service Tariff, Original Volume No. 16, Rate 625 Original Sheets 65–66; Rate 626 Original Sheet 70. Effective July 1, 2025. Checked 2026-10-03; review by 2027-10-03.
Rates 631, 632, 633 Industrial Power (10,000 kW and up)
Applies to: Rate 631: at least 10,000 kW; Rate 632: 15,000–25,000 kW; Rate 633: 10,000–25,000 kW, at the applicable transmission or subtransmission voltage.
How it works: The adjustment compares lagging kVAR with the allowance at an 85% power factor at maximum peak-period kW: $0.32 per kVAR of difference is added above the allowance and credited below it. Off-peak kVAR is limited to the peak-period ratio.
"If the Customer's Maximum Peak Period Requirement in Lagging kVAR ... is greater than the number of kVAR at a Power Factor of eighty-five percent (85%) Lagging ... $0.32 times said difference shall be added"
Source: NIPSCO IURC Electric Service Tariff, Original Volume No. 16, Adjustment for Customer's Peak Hours Lagging kVAR: Original Sheets 81, 91, 101. Effective July 1, 2025. Checked 2026-10-03; review by 2027-10-03.
Caveats
- NIPSCO's General Rule 8.6 lets it require power-factor correction, or install facilities at the customer's expense.
- Whether Rate 631 tier elections alter the kVAR provision was not checked.
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 NIPSCO 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.