Barbara N from Norfolk, VA. Dominion Energy territory. I always verify the power factor penalty math on my audit clients, not just whether the penalty applies. On a shipyard support facility, the bill shows a PF of 0.82 and a reactive demand charge of $2,340/month. I ran the tariff formula myself: billing demand equals metered demand times 0.90 divided by actual PF. So 480 kW times 0.90 divided by 0.82 equals 527 kW billing demand. The penalty is on the 47 kW difference at $11.50/kW which should be $540. But the bill shows $2,340. That is 4.3 times what the formula produces. Something is very wrong.
Utility using wrong formula to calculate PF penalty — overcharging by 40%
Barbara, that is a massive discrepancy. Either the utility is using a different formula than what the tariff specifies, or there is an error in how the billing system implements the formula. Pull the exact tariff language and compare it to the bill calculation step by step. Also check whether Dominion has a separate reactive demand charge that is assessed in addition to the billing demand adjustment — some tariffs have both.
Randy, found the problem. The tariff has TWO power factor provisions. Section A adjusts the billing demand using the formula I calculated (the $540 result). Section B separately charges for measured reactive demand (kVAR) at a rate of $3.20/kVAR. My client measured reactive demand is 275 kVAR, so Section B charges $880. The total PF-related charge should be $540 plus $880 equals $1,420. The bill shows $2,340. Still $920 too high.
Barbara, I work in Dominion territory too. Check whether the billing system is applying the Section A demand adjustment AND THEN applying Section B on top of the already-adjusted demand. If they calculate the kVAR charge based on the inflated billing demand (527 kW) instead of the actual metered demand (480 kW), the reactive demand would be overstated. It is a compounding error.
Phil, that is exactly what is happening. The billing system applies Section A first, inflating the demand to 527 kW. Then it recalculates the kVAR based on the 527 kW billing demand at 0.82 PF instead of using the actual metered 275 kVAR. The recalculated kVAR is 367, and 367 times $3.20 is $1,174. Plus the $540 demand adjustment. Total: $1,714. Still not matching the $2,340 on the bill but closer. There might be a third error layer.
Found the third layer. The billing system is also applying a distribution demand adjustment for the power factor on top of the generation demand adjustment. The tariff only authorizes the PF adjustment on the generation component but the system is applying it to both generation and distribution demand. That accounts for the remaining $626 discrepancy. Total overcharge per month: $920. Three separate formula implementation errors compounding on each other.
Three compounding formula errors in the billing system. Barbara, this is not a one-account problem. If the billing system is programmed wrong, every Dominion customer with a power factor penalty in this rate class is being overcharged. You need to present this to Dominion as a systemic billing system error, not just a single account correction.
Filed the dispute with full documentation of all three formula errors. Dominion engineering reviewed my analysis and confirmed the billing system was incorrectly implementing the tariff PF provisions. They corrected my client account back 3 years — credit of $33,120. They also initiated a system-wide review of the PF billing module. The engineering manager told me informally that the errors have likely been in the system since a software update in 2009. Four years of overcharging every PF-penalized customer in their territory.
I asked Dominion how many accounts were affected. They would not give me a number but said they were processing corrections proactively. Three of my other Dominion clients received unexpected PF credits on their next bills — $4,800, $7,200, and $2,100 — without me filing separate disputes. Whatever the total scope is, it is significant. And my reputation with Dominion as a technically credible auditor is now well established.