Power Factor (PF) is a measure of how efficiently electricity is being used.

A higher PF benefits both customers and utilities since it decreases power delivery system losses and requires less system capacity to deliver the same load. For a given load, a lower PF increases current flow on the distribution system resulting in undesirable voltage drops and system losses.

For example Oncor’s Tariff (5.5.5 Power Factor) allows for the adjustment of billing demand if the PF is less than 95%. The PF that will be used is the average PF for the 15 minutes during the peak kW demand. The billing adjustment will occur after ratchets, transformer losses, etc.

All other things equal, a higher PF will result in a lower electric bill. Implementing the PF adjustment encourages customers to maintain a higher PF, which enhances Oncor’s system capacity and helps reduce the customer’s electric bill.

The delivery of electrical energy involves the flow of three types of power: real power, reactive power, and apparent power.

**Power or “Real” Power** – The real power used in all electrical appliances to perform the work. The unit of measure for real power is the watt (also kilowatts, kW).

**Reactive Power** – Inductive loads, such as motors require reactive power to generate and sustain a magnetic field in order to operate. The unit of measure for reactive power is the VAR, or volt-amperes-reactive (also kVAR).

**Apparent Power** – The apparent power of a load is simply the product of the load’s voltage and current (for single-phase loads). For three-phase loads multiply by the voltage and current by √3. The unit of measure for apparent power is the volt-ampere (also kilovolt-ampere, kVA).Power Factor (PF) – The ratio of real power to apparent power, given by the formula PF = kW/kVA.

*Tariff for Retail Delivery Service – Oncor Electric Delivery Compan*y

**5.5.5 Power Factor**

If the Power Factor of Retail Customer’s load is found to be less than 95% lagging as measured at the Meter, Company may require Retail Customer to arrange for the installation of appropriate equipment on Retail Customer’s side of the Meter necessary to correct Retail Customer’s Power Factor between unity and 95% lagging as measured at Meter, or, if Retail Customer fails to correct its Power Factor consistent with this standard, the demand associated with Retail Customer’s use of Delivery Service, as determined in the appropriate Rate Schedules in Section 6.1 RATE SCHEDULES, may be increased according to the following formulas:

**Monthly Power Factor Adjusted Billing kW**

The monthly Power Factor (PF) adjusted billing kW is calculated as follows:

- Calculate the Current Month PF Adjusted NCP kW using the following formula (Actual Monthly NCP kW x 0.95)/Current Month PF.
- The PF Adjusted Ratchet kW is determined by finding the highest value of the previous 11 months PF Adjusted NCP kW multiplied by 80%. The PF Adjusted NCP kW for each month is calculated using the actual PF for that month.
- The monthly PF Adjusted Billing kW is then determined by taking the higher of the Current Month PF Adjusted NCP kW or the PF Adjusted Ratchet kW.

**Determination of 4CP Power Factor Adjusted Billing kW**

The 4CP Power Factor (PF) Adjusted kW is calculated as follows:

- The average of the retail customer’s 15-minute integrated demand at the times of the ERCOT peaks in June, July, Aug. and Sept. adjusted by the associated PF from each of those intervals in accordance with the following formula – (Monthly CP x 0.95)/actual PF at that interval.

This 4CP value will be in effect for the entire calendar year beginning in Jan. of the following year.

Should a Retail Customer’s PF deviate from the standard described above to the point that it is causing Delivery System problems for other Retail Customers, and the Retail Customer fails to correct the problem after sufficient notice, Company may install the necessary equipment on the Delivery System to correct the problem to the standard described above, and the Retail Customer shall be required to reimburse Company for the cost.