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Do you know most of the equipment used in the day-to-day operation of your business does not optimize the power it's provided?
While this may seem insignificant; it could be costing you $100s to even $1000s of dollars each month in additional Utility charges.
Efficiency and Your Utility Bill ▼
What to Look for on Your Next Utility Bill ▼
DEMAND Charge ▼
Transformers, electric motors, arc welders, fluorescent lighting, server banks and other equipment will all impact how efficiently your operation consumes power.
A large amount of wasted power results in a low POWER FACTOR. A low POWER FACTOR means the customer's operation will:
- Draw more current over time
- Experience greater system losses
If the recorded POWER FACTOR is too low, the utility provider must respond by providing additional capacity. In other words, the inefficient operation forces the utility provider to incur additional, unnecessary, costs. Those costs are passed on to the customer as part of their monthly utility bill.
Each utility provider differs in their billing policies and methods, below are some terms to be aware of:
- kVA Billing: Means the utility provider measures and bills every ampere of current, including reactive current.
- Reactive (kVAR) Charge: a waiver of some percentage of kW demand. If exceeded, a tariff is applied for remaining
reactive power. - POWER FACTOR Penalties: a charge for low POWER FACTOR as a percentage of kW demand.
- kW Demand with POWER FACTOR Adjustment: a surcharge or adjustment is added in the form of a
multiplier applied to kW demand.
DEMAND charges are usually the largest portion of the total utility bill, (as much as 75%), but the good news...this charge can be reduced by improving your electrical system's POWER FACTOR.
Most utilities charge for a maximum metered demand, based on either the highest demand in kW or a percentage of the highest recorded demand in KVA (KVA meter), whichever is greater.
A low power factor means the percentage of measured kVA will be greater than the kW demand. So, by reducing energy peaks, reducing KVA, you will limit demand charge.
If a business consumes enough power and the overall system’s
POWER FACTOR drops below 90%— the customer incurs charges.
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