Final answer:
The power factor is the amount by which the power delivered in a circuit is less than the theoretical maximum due to voltage and current being out of phase. There are penalties imposed based on the power factor value, and corrective equipment may be required if the power factor is below a certain threshold.
Step-by-step explanation:
In physics, the power factor is defined as the amount by which the power delivered in a circuit is less than the theoretical maximum due to voltage and current being out of phase. It is calculated using the cosine function (cos).
A power factor penalty is imposed based on the power factor value. For example, a power factor between 0.800 and 0.849 incurs a penalty of 1%, while a power factor between 0.750 and 0.799 incurs a penalty of 2%. Power factors less than 0.700 are not permitted and require corrective equipment installation.
If a power factor remains below 0.700 for two consecutive months, a penalty of 25% is applied to the billing. The penalty is 3% for the first two consecutive months below 0.700. Once the power factor exceeds 0.700, two consecutive months below 0.700 are required for the 25% penalty to apply again.