Power Factor:What Is It and

Estimating Its Cost

Presented by: Marc Tye, P.E.2004 APPA Business & Financial ConferenceSeptember 21, 2004

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What Is Power Factor

Reactive Power (kVAr)Apparent Power (kVA)

Real Power (kW)

Power Factor can be either lagging (inductive) or leading (capacitive).

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Why Utilities Charge For Poor Power Factor?

Low P.F. results in increased system variable costs to produce real power Losses Fuel Costs

Low P.F. results in increased system fixed costs to transmit/distribute real power Generators Conductors Transformers Capacitors

Reactive power must be produced or absorbed to maintain transmission voltages within acceptable limits.

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Santee Cooper Uses Various Methods to Charge for Reactive Power

Generation and Transmission Customers

Reactive cost is included in customers’ average embedded rates.

Power factor penalty is charged to customers not maintaining a 90% P.F.

Transmission Only Customers

Reactive supply and voltage control is a required ancillary service.

Charge based upon the amount of power the customer is wheeling across the transmission system.

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Santee Cooper’s Industrial PowerFactor Requirement

“The Customer’s Excess Reactive Demand for each Billing Month shall be the amount, if any, by which the Customer’s maximum 30-minute integrated reactive demand, in kilovars (kVAr), during such Billing Month exceeds 48.5% of the Customer’s Measured Demand, in kilowatts (kW), for such Billing Month.”

Equivalent to a minimum of 90% power factor by the Customer

Customer can correct to 90% power factor or company will charge for excess reactive demand

L-96 Excess Reactive Demand Charge:

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Industrial Reactive Demand Charge Based on

Average Cost of Capacitor Bank

1. Cost of 69kV, 12,000 kVAr Bank

Annual Costs:

2. Debt Service3. O&M

4. Subtotal5. CIFR

6. Total

7. Annual Cost per kVAr8. Monthly Cost per kVAr

9. Adjusted for Inflation

10. Adjusted for Losses

11. Rounded

$255,678

$ 49,257$ 3,000

$ 52,257$ 4,855

$ 57,112

$ 4.76$ 0.40

$ 0.43

$ 0.448

$ 0.44

(7.5% interest, 7 years)

(8.5%)

(Line 6 / 12,000)(Line 7 / 12)

(2 years @ 4%)

(3.65%)

/ kVAR - mo

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Power Factor Example

7,000 kVAr13,892 kVA

12,000 kW

Cos = 12,00013,892

= 86.4%

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Example of Excess Reactive Demand Charge

1. Measured Demand (kW)

2. Measured Reactive Demand (kVAr)

3. Power Factor

4. Allowed Reactive Demand w/o Charge (kVAr)

5. Excess Reactive Demand (kVAr)

6. Excess Reactive Demand Charge

12,000

7,000

86.4%

5,820

1,180

$519.20

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Santee Cooper Open AccessTransmission Tariff

Reactive supply and voltage control from generation sources service is a required ancillary service.

Ancillary service used to maintain transmission voltage

Rate is based on allocated portion of the cost of exciter and generator for each unit that produces kVAr’s.

Rate also includes allocated portion of the power consumed by the exciter.

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Reactive Power Cost SummaryGenerator / Exciter Costs

1. Generator and exciter fixed costs (VAr Related)

2. Production fixed charge rate

3. Generator and exciter costs charged to VArs

4. Fixed O&M charged to VArs

5. Total

$6,864,834

12.06%

$ 827,899

$ 224,589

$1,052,488

Real Power Output Charged to Exciter

6. Exciter power consumption

7. Exciter energy consumption

8. Total

9. Total reactive support cost

10. Single system coincident peak (kW)

11. Monthly point to point rate ($ / kW.mo)

$ 116,361

$ 158,780

$ 275,141

$1,327,629

3,037,000

$ 0.0364

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Example of Reactive Supply and Voltage Control Charge

1. Measured Point to Point Reservation (MW)

2. Monthly Reactive Supply and Voltage Control Charge (kW)

3. Total Monthly Reactive Supply and Voltage Control Charge

100

$0.0364

$3,640