Is Your Power Factor Causing a Utility Bill Increase?

In order to always provide the electricity required of energy users, and to maintain electric grid reliability, utility suppliers need to know a company’s peak electric demand. When providing electricity to a facility, whether it is powering a manufacturing line, a facility’s air conditioning, or compressors for snowmaking, electricity is demanded at a given rate. In most cases, the initial electricity required to start up the system exceeds the amount of electricity needed to keep the system running.

On your company’s electric utility bill there are two types of demand recorded; kilowatts (kW), which is the amount of power that is being used (real power), and kilovolt-amps (kVA) or the ‘apparent power’ of the system.

If a company is using power inefficiently, it will have a negative effect on their power factor (the ratio of real power to apparent power). An inefficient power factor will increase a client’s utility bill because the power factor will cause the kVA demand to be higher than the kW demand. Also, Power factors less than 90% (ratio of kW/kVA) within some utilities will cause an additional increase in the demand cost. This can be confusing, and therefore easy to overlook if you aren’t sure what to look for when assessing your utility bills.

Recently, while reviewing one of our client’s electric utility bills, we noticed that the kVA was greater than the kW; meaning that the client had a poor power factor. Since the client had already optimized their building system, we thought it would be beneficial for the client to install capacitors on some of their equipment to raise the power factor. By accumulating and holding electricity, capacitors increase a system’s carrying capacity, which raises the kW power factor and reduces kVA demand. In essence, you are able to increase the kW load without affecting the kVA. Once the power factor is increased, kW demand should increase above kVA demand, and the utility will begin calculating demand charges on the kW rather than the kVA. By understanding their power factor and making prudent adjustments, our client quickly saw improvements.

If you aren’t sure if your demand is being billed based on your kW or kVA, Usource can analyze your utility bills to see if savings can be achieved. Click here to request a utility bill review.

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About the author

Jesse Ram

Jesse works with clients to help them meet their sustainability goals while reducing expenses and generating revenue through community solar, land leases, and distributed generation resources. He provides clients with analytically based insight and actionable information to reduce overall energy costs and improve performance.

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