Maria G from El Paso, TX. Brand new to auditing and I have a client whose bill shows three different demand numbers: 245 kW, 289 kVA, and 152 kVAR. The demand charge is based on the kVA number, not the kW number. That seems wrong to me — I thought demand was measured in kW. Can someone explain why the utility is billing on kVA and what the kVAR number means? I do not want to dispute something I do not understand.
Help — I do not understand kW vs kVA vs kVAR on the bill
Maria, great question and good instinct to learn before you dispute. Here is the short version: kW is real power — the power that actually does work. kVAR is reactive power — the power that magnetizes motors and transformers but does not do useful work. kVA is apparent power — the combination of real and reactive, calculated as the square root of kW squared plus kVAR squared. Think of it like a right triangle: kW is one side, kVAR is the other side, and kVA is the hypotenuse. Power factor is kW divided by kVA. Your client PF is 245 divided by 289 which equals 0.848.
To add to Randy explanation — some utilities bill demand in kW and then add a separate power factor penalty. Other utilities bill demand in kVA which automatically penalizes low power factor because the kVA number is always higher than the kW number when PF is below 1.0. Your client utility is using the kVA billing method. At 0.848 PF, the client is paying demand charges on 289 kVA instead of what would be 245 kW on a kW-billed tariff. That 44 unit difference is the hidden power factor penalty.
OK this is starting to make sense. So kVA billing is basically a built-in power factor penalty? If the client had perfect power factor of 1.0, the kW and kVA would be the same number?
Exactly right Maria. At PF of 1.0, kW equals kVA and kVAR is zero. The worse the power factor, the bigger the gap between kW and kVA. Your client at 0.848 PF is paying about 18% more in demand charges than they would at unity power factor. Whether that is fixable depends on what is causing the low PF — usually induction motors, old fluorescent lighting ballasts, or welding equipment.
Maria, one practical tip — when you see kVA billing, calculate what the demand charge would be if it were billed on kW instead. That tells you the dollar value of improving the power factor. If the difference is significant, a capacitor bank to correct the PF often pays for itself in 6-12 months. Your client 44 kVA difference at whatever the demand rate is — that is the monthly savings potential.
Felix, the demand rate is $12.40/kVA. So 44 excess kVA times $12.40 equals $545/month or $6,540/year in avoidable power factor costs. Even I can see that is worth investigating a capacitor bank. How much would correction equipment cost for a 152 kVAR reactive load?
For 152 kVAR of correction you are looking at a 150-175 kVAR automatic capacitor bank. Installed cost is typically $6,000-9,000 depending on the configuration and local labor rates. At $6,540/year in savings, the payback is 11-16 months. Very solid investment. Get two or three quotes from local electrical contractors who specialize in power factor correction.