As a commercial customer, it is important to understand how power factor is calculated, since you may be charged a reactive power fee if your facility's power factor is below 95%.

The power factor triangle below illustrates how real power, reactive power and apparent power relate to each other to get the power factor angle. One way to get the power factor is by getting the cosine of the power factor angle.

The best way to calculate power factor is by using the following formula:

The example below shows a power factor rating of less than 95%, which means the customer would be responsible for a reactive power charge.

Maximum Real Power for billing period = 1,000 kW
Reactive Power at the time of maximum kW demand = 750 kVAr
Apparent Power = SQRT [(1,000 kW)2 + (750 kVar)2] = 1,250 kVA
Power Factor =	1,000 kW 1,250 kVA	= 0.80 = 80%

Because the power factor is below 95%, a charge of $0.40 per kVar is applied to the bill. To lessen the charge, Orange & Rockland subtracts 1/3 of the kW (real power) when calculating for billable kVar (reactive power), as shown below.

Billable kVar = 750kVar – 1/3(1,000) = 416.7 kVar Reactive Power charge = 416.7kVar X $0.40 = $166.68