What is power factor and why is my business billed for it?

Short answer: Power factor measures how much of the electricity delivered to your site does useful work. Motors, compressors and older lighting draw current that does no work, so the utility must deliver more capacity than you actually use. Where demand is billed in kVA, or a low power factor penalty applies, you pay for that difference.

Last updated September 12, 2026.

The plain-English version

Think of a poured beer. The liquid is the power doing work; the foam still fills the glass and
still had to be poured. Power factor is the ratio of liquid to the whole glass. A site at 0.75 power
factor is asking the grid for roughly a third more capacity than its useful work requires, and the
tariff notices.

Who has a problem with it

Typical power factor Sites
0.95–1.0 (fine) Offices, retail, mostly-electronic and resistive loads
0.85–0.95 (worth checking) Restaurants, grocery, mixed commercial with
refrigeration
Below 0.85 (worth acting on) Shops with large motors, welders, compressors, pumps,
sawmills, irrigation, older industrial equipment

Lightly loaded motors are the usual culprit — an oversized motor running at a fraction of
its rating has noticeably worse power factor than the same motor working properly.

Finding it on your bill

Look for a power factor figure, a kVA demand line, or a “low power factor adjustment” in the
delivery section. If your demand is billed in kVA rather than kW, you are already
paying for it whether or not a penalty line appears.

Fixing it

Correction is usually capacitor banks sized to the site, sometimes at specific pieces of
equipment. It is a well-understood, unglamorous piece of engineering with a payback you can actually
calculate — and unlike a rate change, it keeps paying every month regardless of what the market
does. Where a site warrants it, power factor correction is one of the measures included in our
Energy Cost Audit.

Worth saying plainly: not every business needs this. An office with no motor
load will not benefit, and we will tell you so rather than sell you equipment.

Book a free Energy Cost Audit

Send us one recent electricity bill and one natural gas bill. We review both halves — the
energy you buy and the delivery charges you are billed to receive it — and come back with a
written summary of what we found and what, if anything, is worth changing. No cost, no obligation,
and no requirement to switch anything.

Upload your bills — free Energy Cost Audit

Prefer email? Send your bills to
info@getenergy.ca, or call
(780) 665-4771, Monday to Friday 9 AM–5 PM.

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Get Energy is an Alberta competitive retailer and energy broker serving
residential, small business, farm and commercial consumers. Get Energy is a tradename of Utility
Network & Partners Inc.