Some Considerations for Designing a Reactive Power Charge

Electricity tariffs that levy charges for electricity usage on the basis of only active power demand (in kW) and/or active energy (in kWh) do not offer customers incentive to control their reactive power demand (in kVAr) and/or reactive energy consumption (in kVArh). The consequence is that poor power factor, for the entire system, may result, leading to the degradation of the power system, The introduction of tariffs that have an apparent power charge (in kVA) does go some way in incentivizing customers to deal with their reactive power consumption, as this type of charge encourage them to improve their power factors.. However, further improvement in the utilization of power systems can be realized by having a tariff that directly charges for reactive power. In this paper, results of a survey on international practices on levying a reactive power charge to the customers are discussed.