A methodology for designing low power factor penalties in distribution networks

Low power factors are considered one of the pressing issues in the distribution system planning and operation particularly at countries where a monetary cost´s scheme of the reactive power usage is not applied. Regulations, financial penalties and incentives, and technical solutions have all been used to improve low power factor levels. In this paper, a study and comparisons between several low power factor penalty schemes are considered leading to the most optimum method to be applied in practice. The study helps with highlighting the factors that have to be considered when designing such penalties in order to eliminate the wide difference in the adopted power factor regulations around the world. The use of the excessive reactive power/energy tariff to be the penalty for the low power factor customers seems to be the favorable choice for utilities due to its consistency and reliability. Although the case in the Kingdom of Saudi Arabia is highlighted here, the methodology is valid for other markets.