Reactive power is one of the most significant ways that electricity is lost when it travels along power lines. The more reactive power that customers use, the more energy the electric system loses. This results in the use of larger equipment on the distribution system that otherwise would be unnecessary. There is also a corresponding increase in the amount of greenhouse gases that get released into the atmosphere. Fortunately, there are ways to reduce the amount of reactive power being lost through the system, by improving your power factor. Improving your power factor could be beneficial to you as a customer.

Some of the benefits of improving power factor are:

• Your utility bill will be smaller. Low power factor requires an increase in the generation and transmission capacity to handle the reactive power, so improving power factor will require less reactive power being drawn from the system.
• You won't be charged a reactive power fee if your power factor is above 95%
• Your electrical system's branch capacity will increase. With low power factor, power losses can occur in your distribution system, and you may even experience voltage drops. This may cause overheating and premature failure of motors and other inductive equipment.