Ken from Denver. Client's utility bill includes a power factor penalty. Someone told the client that power factor correction capacitors would eliminate the penalty and reduce the demand charge. Is that accurate and is it worth the capital investment?
Power factor correction and demand charges — does it actually help
Greg from Columbus. Power factor correction eliminates the power factor penalty specifically but its effect on the kW demand charge depends on how the utility meters demand. If the demand is metered in kW true power the kW demand charge is not reduced by power factor correction. If the demand is metered in kVA apparent power then correction helps significantly.
Ken again. How do I tell which type of demand the utility is measuring?
Greg again. Look at the demand reading unit on the bill. kW means true power and power factor correction will not reduce the demand charge itself. kVA means apparent power and correction will reduce both the penalty and potentially the demand charge.
Sam from Atlanta. I have seen clients install capacitor banks that eliminated the penalty but did not reduce their demand charge because they were on a kW metered schedule. The capital cost was not justified by penalty elimination alone. Make sure the client understands what they are buying before they commit.
Sam that would be a painful lesson for the client. I want to make sure I give them the right advice here.
Sam again. Pull the exact demand metering language from the tariff and share it with the client and their electrical engineer if they have one. Do not rely on what the utility rep tells them verbally — get it in writing from the tariff.