Terry from Knoxville. Found a power factor adjustment on a manufacturing client that increased their billed demand by 18 percent above actual peak. Client had no idea this was happening. How common are these and what is the recovery path?
Power factor penalties explained and disputed
Walt from Pittsburgh. Very common in industrial accounts. The power factor adjustment penalizes you for drawing reactive power. If your motors and transformers are not corrected you can have a real demand of 200 kW but get billed for 236 kW.
Derek from Charlotte. The recovery path for past penalties is limited if the utility was applying the tariff correctly. The real value is identifying the problem so the client can install capacitor banks and eliminate it going forward.
Is that distinction something I need to disclose upfront? That past charges may not be recoverable?
Yes. I am always clear that power factor findings are primarily forward savings not retroactive recovery. The math on correction equipment is usually compelling regardless, often a 12 to 18 month payback.
Mike D from Raleigh. Exception: if the meter was recording inaccurate power factor due to a meter error rather than the client's actual power factor, that IS a retroactive error. Always verify the recorded power factor against any in-house measurements.
Frank from Albuquerque. Found a case where the utility's meter had a calibration error affecting power factor readings. Client had installed capacitor banks two years prior but the meter never reflected it. Recovered 24 months of excess penalty billing.