Reactive power charges are electricity-network charges that can apply when a business draws too much reactive energy compared with the active energy it uses.
For many site-specific half-hourly supplies in Great Britain, the practical threshold is a power factor of 0.95.
If reactive energy exceeds approximately 32.87% (usually rounded to 33%) of active energy in a half-hour, the excess can be charged in pence per kilovolt-ampere reactive hour, or p/kVArh.
The short version is:
Chargeable reactive energy = reactive energy above the 0.95 power-factor threshold
Poor power factor does not necessarily mean that a business is wasting the same number of kilowatt hours shown as reactive units. It means the electrical system must carry more current and apparent power to deliver the same useful power. This can increase network losses, occupy connection capacity and add direct reactive-power or excess-capacity charges.
Installing correctly designed power-factor correction can reduce these costs. However, capacitor banks should not be selected from a bill alone. Load variation, harmonics, existing generation, voltage and the position of the metering point all need to be assessed by a competent electrical specialist.
This guide explains kW, kVA, kVAr and kVArh; shows the current Great Britain charging calculation; provides a worked business-bill example; and includes a power-factor correction calculator that can be added to an EnergyCosts.co.uk page.
Charges and technical sources last reviewed: 6 August 2026.
Reactive power charges at a glance
| Question | Short answer |
|---|---|
| What is reactive power? | Power that repeatedly moves between the supply and reactive equipment without becoming useful mechanical work, heat or light |
| What unit measures reactive power? | kVAr |
| What unit appears on bills? | kVArh, measuring reactive energy over time |
| What is power factor? | Active power in kW divided by apparent power in kVA |
| What is an ideal power factor? | 1.00, also called unity |
| What is the common charge threshold? | 0.95 power factor, equivalent to reactive energy of about 32.87% of active energy |
| Who commonly receives a separate charge? | Businesses on site-specific half-hourly LV or HV distribution tariffs |
| Does every half-hourly meter pay it? | No; the metering and settlement arrangement alone do not determine the tariff |
| How is the charge calculated? | Chargeable kVArh in each half-hour × the applicable p/kVArh rate |
| Can a supplier hide the charge? | It may be separately itemised, passed through under another heading or incorporated into an inclusive price |
| How is poor power factor corrected? | Commonly through fixed or automatic capacitor banks, sometimes with detuning or harmonic filtering |
| Does correction reduce kWh substantially? | Usually not; its main effect is to reduce reactive demand, kVA and current, although internal losses may also fall |
| Should a business target exactly 1.00? | Not automatically; a stable target such as 0.97–0.99 may be more suitable for a varying load |
What is reactive power?
Alternating-current equipment can require two components of power:
- Active power performs useful work, such as turning a motor shaft, heating an oven or producing light.
- Reactive power establishes and collapses electric or magnetic fields in equipment such as motors and transformers.
Reactive power moves backwards and forwards between the supply and the equipment. It is necessary for many loads to operate, but it does not produce the useful output for which the business bought the electricity.
The network must still carry the associated current. Cables, switchgear, transformers and the business’s connection must therefore be sized for the combined requirement, known as apparent power.
The three quantities are:
| Quantity | Symbol | Unit | What it describes |
|---|---|---|---|
| Active power | P | kW | Power converted into useful work, heat or light |
| Reactive power | Q | kVAr | Power associated with electric and magnetic fields |
| Apparent power | S | kVA | Total electrical loading carried by the system |
For a simple sinusoidal AC load, they form a right-angled power triangle:
kVA = √(kW² + kVAr²)
The same relationship can be applied to kWh, kVArh and kVAh over a consistent measurement interval.
Reactive power is not the mathematical difference obtained by subtracting kW from kVA. It is the perpendicular component of the power triangle. This distinction matters when checking calculations.
What do kVAr and kVArh mean?
The lower-case “k” means kilo, or one thousand. “VA” means volt-amperes, and the “r” identifies the reactive component.
- kVAr is a rate of reactive power at a moment or averaged over an interval.
- kVArh is the quantity of reactive energy accumulated over time.
- kVA measures apparent power and is commonly used for Maximum Import Capacity.
- kW measures active power.
- kWh measures active energy and is the main unit used for the electricity unit charge.
A business bill may use any of the following labels:
- Reactive energy
- Excess reactive energy
- Reactive power
- Reactive import
- Reactive export
- kVArh
- RP charge
- DUoS reactive charge
- Power-factor charge
The wording is not fully standardised between suppliers. The important details are the number of chargeable kVArh, the p/kVArh rate, the billing period and the associated MPAN or meter.
What is power factor?
Power factor describes how effectively apparent power is being converted into active power.
Power factor = kW ÷ kVA
For an undistorted sinusoidal load, power factor is also the cosine of the phase angle between voltage and current:
Power factor = cos φ
A power factor of 1.00 means that 500kW of active power requires 500kVA of apparent power. A power factor of 0.80 means the same 500kW requires 625kVA.
| Power factor | kVA needed for 500kW | Reactive power | Extra apparent capacity versus unity |
|---|---|---|---|
| 1.00 | 500.00kVA | 0.00kVAr | 0.0% |
| 0.98 | 510.20kVA | 101.53kVAr | 2.0% |
| 0.95 | 526.32kVA | 164.34kVAr | 5.3% |
| 0.90 | 555.56kVA | 242.16kVAr | 11.1% |
| 0.85 | 588.24kVA | 309.87kVAr | 17.6% |
| 0.80 | 625.00kVA | 375.00kVAr | 25.0% |
| 0.70 | 714.29kVA | 510.10kVAr | 42.9% |
At a fixed voltage and active load, the current changes broadly in proportion to kVA. Improving a 500kW load from 0.80 to 0.95 power factor reduces its apparent demand from 625kVA to approximately 526kVA and its current by about 15.8%.
Lagging and leading power factor
Most traditional poor-power-factor problems are caused by inductive loads. Their current lags the voltage, producing a lagging power factor.
Common inductive loads include:
- Induction motors
- Lightly loaded motors
- Transformers
- Air-conditioning and refrigeration compressors
- Pumps and fans
- Lifts and escalators
- Conveyors
- Welding equipment
- Older fluorescent and discharge lighting
- Induction furnaces
Capacitors produce reactive power in the opposite direction. They are therefore used to compensate for inductive reactive demand.
Too much capacitance can create a leading power factor, particularly when machinery is switched off but a fixed capacitor remains connected. Leading reactive power can also create network, voltage and equipment problems. Correction equipment should therefore follow the load rather than simply adding the largest possible capacitor bank.
Displacement power factor and true power factor
The simple cosine relationship describes displacement power factor: the phase displacement between the fundamental voltage and current waveforms.
Electronic loads can distort the current waveform. In that situation, true power factor also reflects harmonic distortion. Variable-speed drives, uninterruptible power supplies, switch-mode power supplies, LED drivers, data-centre equipment and EV chargers can all affect power quality, depending on their design.
A capacitor bank may correct phase displacement without curing harmonic distortion. It can also interact with the installation’s inductance and create resonance. The IET’s power-factor correction guidance distinguishes the basic cosine calculation from distorted current, while ABB’s technical note on power factor explains why ordinary capacitors may be less effective in the presence of harmonics.
This is why a site with many drives, inverters or electronic loads should have a harmonic and power-quality survey before capacitors are specified.
Why do network operators charge for reactive power?
Poor power factor increases the current required to deliver a given amount of active power. This has several consequences.
More network capacity is occupied
Transformers, cables and switchgear are rated in amperes or volt-amperes rather than useful kilowatts alone. Reactive demand leaves less capacity available for active power.
Electrical losses increase
Resistive losses are proportional to the square of current:
Cable loss = I²R
If current rises by 20%, resistive loss rises by approximately 44%, assuming resistance is unchanged.
Voltage drop can increase
Higher current can increase voltage drop within the network and the business’s own installation. This may affect motor performance and sensitive equipment.
Larger equipment may be required
A network or private installation designed for poor power factor may need higher-rated transformers, cables, switchgear and generators than one delivering the same kW at a better power factor.
The 2026/27 UK Power Networks charging guidance says that power factor below 0.95 creates higher losses and may require higher-capacity equipment. It also notes that correcting power factor can reduce reactive charges, reduce kVA demand and lower voltage drop. See the current Eastern Power Networks charging statement.
Which businesses pay reactive power charges?
Separate reactive-power charges most commonly affect larger businesses with site-specific half-hourly metering and LV or HV connections charged under the Common Distribution Charging Methodology.
Potentially affected sites include:
- Factories and engineering works
- Cold stores and food manufacturers
- Warehouses with conveyors or refrigeration
- Quarries and mineral-processing sites
- Water and wastewater facilities
- Hospitals and large care facilities
- Hotels and leisure centres
- Data centres
- Large offices with central HVAC
- Farms using pumps, ventilation or refrigeration
- EV fleet depots and charging hubs
- Retail premises with substantial refrigeration
Not every business with half-hourly data receives a separate kVArh charge. The result depends on the DNO area, connection voltage, LLFC or DUoS Tariff ID, billing approach and contract structure.
The current UK Power Networks statements, for example, show a separate reactive-power rate for site-specific LV, LV substation and HV tariffs, but not for ordinary aggregated non-domestic tariffs. Transitional arrangements associated with Market-wide Half-Hourly Settlement can also affect the charge structure.
An EHV site may not have a standalone p/kVArh component. Under the Extra-high Voltage Distribution Charging Methodology, poor power factor can instead affect site-specific unit and capacity charges. UK Power Networks’ 2026/27 statements explicitly say that EDCM charges reflect power factor even though there is no separate reactive-flow component.
Northern Ireland has a separate electricity market and NIE Networks charging statement. A Northern Irish business should use the tariff and formula applicable to its own connection rather than assuming that the Great Britain example below applies.
Is reactive power a DUoS charge?
In Great Britain, a separate excess-reactive-power charge is normally part of Distribution Use of System charges. The DNO calculates the network tariff, but the business’s electricity supplier usually bills the customer.
The cost may be:
- Shown as a separate reactive-energy line
- Included within an itemised DUoS section
- Passed through and reconciled later
- Combined with other non-commodity charges
- Incorporated into an inclusive unit rate or standing charge
Read our guides to DUoS charges and non-commodity charges for the wider billing context.
On an inclusive fixed-price contract, eliminating a physical reactive-power problem may not create an immediate line-by-line saving during the fixed term. It can still affect future quotations, capacity, losses and the supplier’s reconciliation position. The contract should be checked before a payback calculation assumes that every avoided DNO cost will be returned directly to the customer.
The 0.95 power-factor threshold explained
The common threshold can be derived from the power triangle.
At power factor 0.95:
Reactive-to-active ratio = tan(cos⁻¹(0.95))
Reactive-to-active ratio = 0.328684
Reactive energy at the boundary is therefore approximately 32.87% of active energy. Charging statements generally describe this as 33%.
For every 100kWh of active import in a half-hour, the allowance is approximately:
100kWh × 0.328684 = 32.87kVArh
If the meter records 75kVArh in that interval, the estimated chargeable amount is:
75 − 32.87 = 42.13kVArh
If it records 30kVArh, there is no chargeable excess for that interval.
How reactive power charges are calculated
The exact Great Britain CDCM calculation is applied to every half-hour and the positive results are summed over the billing period.
For active demand, a useful representation is:
Chargeable kVArh = max[max(RI, RE) − (AI × 0.328684), 0]
Where:
- AI is active import in kWh during the half-hour.
- RI is reactive import in kVArh during the half-hour.
- RE is reactive export in kVArh during the half-hour.
- 0.328684 is the reactive-to-active ratio at 0.95 power factor.
The formula uses reactive values recorded when active energy is being imported. Generation calculations use active export and the corresponding reactive values.
The monetary charge is:
Reactive-power charge = sum of chargeable half-hourly kVArh × p/kVArh rate ÷ 100
The current South Eastern Power Networks charging statement and SSEN Southern charging statement both set out the 0.95 threshold and half-hourly calculation.
Why monthly totals can give the wrong answer
The unused reactive allowance in one half-hour cannot necessarily cancel an excess in another half-hour.
Consider 1,000 half-hours:
| Interval group | Number of half-hours | Active energy per half-hour | Reactive energy per half-hour | Chargeable kVArh per half-hour |
|---|---|---|---|---|
| Machinery operating | 400 | 100kWh | 75kVArh | 42.13kVArh |
| Light load | 600 | 100kWh | 20kVArh | 0kVArh |
The exact chargeable quantity is approximately:
400 × 42.13 = 16,852.64kVArh
Adding the monthly totals first gives 100,000kWh and 42,000kVArh. A simplified monthly calculation would produce only 9,131.59 chargeable kVArh.
The simplified result is too low because it uses spare headroom from the good half-hours to offset the poor half-hours. An accurate bill check therefore requires interval data, not just monthly totals.
Current 2026/27 reactive-power rates
There is no single national p/kVArh price. The rate depends on the DNO licence area and the site’s tariff.
The following published UK Power Networks rates apply from 1 April 2026 to its standard all-the-way site-specific demand tariffs. Figures are pence per excess kVArh and exclude VAT.
| Network area | LV site-specific | LV substation site-specific | HV site-specific |
|---|---|---|---|
| Eastern Power Networks | 0.369p | 0.220p | 0.183p |
| London Power Networks | 0.522p | 0.323p | 0.244p |
| South Eastern Power Networks | 0.361p | 0.214p | 0.186p |
Sources: UK Power Networks’ 2026/27 statements for Eastern Power Networks, London Power Networks and South Eastern Power Networks.
These are examples rather than a UK price range. IDNO discounts, generation tariffs, special arrangements and another DNO’s schedule can produce a different rate. Always identify the MPAN’s LLFC or DUoS Tariff ID and use the charging statement covering the invoice dates.
Worked reactive-power bill example
Assume a London business has an LV site-specific supply and a consistent monthly power factor of 0.80.
| Input | Figure |
|---|---|
| Active energy | 100,000kWh |
| Reactive energy | 75,000kVArh |
| Calculated power factor | 0.80 |
| Reactive allowance at 0.95 | 32,868.41kVArh |
| Chargeable reactive energy | 42,131.59kVArh |
| Published tariff rate | 0.522p/kVArh |
The charge is:
42,131.59 × 0.522p ÷ 100 = £219.93
If the same conditions continued for 12 months, the direct reactive charge would be approximately:
£219.93 × 12 = £2,639.12 a year
If correction raised every half-hour to at least 0.95, the direct excess-reactive charge would theoretically fall to zero. Actual savings must be calculated from half-hourly data, because the business’s load and power factor will vary.
How poor power factor affects capacity charges
The separate reactive-energy line is not always the largest cost.
Maximum Import Capacity is measured in kVA. At 500kW:
- 0.80 power factor requires 625.00kVA.
- 0.95 power factor requires 526.32kVA.
- 0.98 power factor requires 510.20kVA.
Improving from 0.80 to 0.98 releases approximately 114.80kVA of apparent capacity without reducing the 500kW productive load.
This can create value in three different ways:
- It may prevent an excess-capacity breach.
- It may create headroom for new machinery without a connection upgrade.
- It may support an application to reduce the agreed MIC.
These outcomes should not be combined indiscriminately. A normal capacity charge is usually based on agreed MIC, not measured monthly demand. Improving power factor does not automatically alter the contractual MIC. The business must apply for a reduction, and the DNO can consider recent maximum demand, connection requirements and its rules on how often capacity can be changed.
The current London Power Networks LV site-specific capacity rate is 7.23p/kVA/day. If a business could safely reduce its agreed capacity by 100kVA and the DNO approved the change, the annual saving at that example rate would be:
100kVA × 7.23p × 365 ÷ 100 = £2,638.95
This is almost the same as the direct reactive-charge saving in the worked example. If the MIC remains unchanged, that £2,638.95 does not become a bill saving.
Read our guide to Maximum Demand, Maximum Import Capacity and capacity charges before changing an agreed capacity level.
Does power-factor correction reduce kWh?
Power-factor correction does not normally reduce the useful energy required by a motor, compressor or production process. A 100kW mechanical requirement remains approximately a 100kW requirement.
Its primary effects are to reduce:
- Reactive power drawn from the upstream supply
- Apparent power in kVA
- Current in cables upstream of the correction point
- Resistive losses in those cables and transformers
- Voltage drop
- Direct excess-reactive charges
- The risk of capacity excess
Some kWh saving can occur because lower current reduces internal I²R losses. The amount depends on where correction is installed and where the meter sits. A proposal that treats every avoided kVArh as an avoided kWh is incorrect.
Power-factor correction should also not be confused with voltage optimisation. They address different electrical characteristics and require separate assessments.
How to calculate the required capacitor size
The first-stage formula is:
Required correction kVAr = kW × [tan(cos⁻¹ existing PF) − tan(cos⁻¹ target PF)]
ABB’s power-factor correction technical guide uses this relationship when calculating capacitor-bank size.
For a 500kW load improving from 0.80 to 0.95:
500 × [tan(cos⁻¹ 0.80) − tan(cos⁻¹ 0.95)]
500 × (0.750000 − 0.328684) = 210.66kVAr
Improving the same load from 0.80 to 0.98 requires:
500 × (0.750000 − 0.203059) = 273.47kVAr
These are theoretical steady-load values, not finished equipment specifications. A variable load may require an automatically switched bank split into several stages. Harmonics may require detuned reactors, differently rated capacitors or an active filter. Voltage, temperature, ventilation, fault level, switching duty, protection and future load changes also affect the design.
Use our power-factor correction calculator
Use the calculator below to estimate:
- Required correction in kVAr
- Existing and target kVA
- Apparent capacity released
- Direct reactive-charge saving under a constant power-factor assumption
- Theoretical value of released capacity
The direct-charge estimate is not a substitute for a half-hourly calculation. The capacity figure becomes a saving only if an excess is avoided or the DNO approves a lower MIC.
Power factor correction calculator
Estimate the correction required and the possible effect on reactive-power and capacity charges.
This is an indicative estimator. DNO reactive charges are normally calculated for each half-hour. Capacity value is realised only where excess capacity is avoided or the DNO agrees a lower MIC. Obtain a power-quality survey before selecting equipment.
Worked power-factor correction business case
Consider a 500kW industrial load operating at 0.80 power factor, with 1.2GWh of annual active consumption and the London LV site-specific example rates.
The business proposes a target of 0.98.
| Calculation | Before correction | After correction |
|---|---|---|
| Active load | 500kW | 500kW |
| Power factor | 0.80 | 0.98 |
| Apparent demand | 625.00kVA | 510.20kVA |
| Reactive power | 375.00kVAr | 101.53kVAr |
| Direct chargeable reactive energy, estimated | 505,579kVArh/year | 0kVArh/year |
| Direct reactive charge at 0.522p/kVArh | £2,639.12/year | £0/year |
The indicative correction requirement is 273.47kVAr, and approximately 114.80kVA of apparent capacity is released.
Now assume the business receives a compliant turnkey quotation of £15,000.
Scenario one: no MIC reduction
Only the direct reactive charge is counted:
£15,000 ÷ £2,639.12 = 5.7-year simple payback
Scenario two: DNO approves a 100kVA MIC reduction
The direct reactive saving and approved capacity saving are counted:
Annual benefit = £2,639.12 + £2,638.95 = £5,278.07
£15,000 ÷ £5,278.07 = 2.8-year simple payback
The £15,000 is a hypothetical quotation, not a market-price estimate. Maintenance, finance, downtime, internal loss savings, tariff changes and tax have been excluded.
This comparison demonstrates why a business case should not promise an MIC saving before the DNO has agreed the change.
Power-factor decision table
| Site finding | Likely interpretation | Sensible next action |
|---|---|---|
| Power factor 0.98–1.00 across operating conditions | Strong performance | Monitor trends and maintain existing correction equipment |
| Power factor 0.95–0.979 | Usually above the direct-charge boundary | Check capacity headroom and whether performance falls during particular shifts |
| Power factor 0.90–0.949 | Direct charge likely in affected half-hours | Obtain interval data and a correction survey |
| Power factor below 0.90 | Substantial reactive and capacity burden | Prioritise investigation of loads and failed correction equipment |
| Good average PF but repeated half-hourly charges | Poor periods are hidden by the average | Analyse half-hourly active and reactive data |
| Low PF only at light load | Fixed correction may be over- or under-switching | Review automatic stages, controller settings and transformer magnetising demand |
| Significant VSD, UPS, LED or charger load | Harmonics may be important | Commission harmonic measurements before adding capacitors |
| No direct kVArh charge but kVA near MIC | Capacity remains the issue | Model correction against maximum half-hour demand and future load |
| Behind-the-meter solar has lowered imported kW | Meter-point PF may worsen even though grid kWh fell | Reassess the site at different generation and load conditions |
| Leading PF occurs when plant is off | Possible overcorrection | Isolate fixed stages or redesign automatic control |
These bands are screening indicators, not equipment settings. The correct target depends on the load profile, network agreement and power-quality conditions.
How to reduce reactive power charges
Repair existing correction equipment
Many sites already have a capacitor bank that no longer works properly. Failed fuses, worn contactors, failed capacitor cans, a faulty current transformer, incorrect controller settings, blocked ventilation or disconnected stages can all reduce performance.
Comparing current kVArh data with older bills can reveal when the problem began.
Correct individual large loads
A fixed capacitor can be installed close to a motor or another stable inductive load. Local correction reduces current in the cable between that load and the main switchboard as well as at the meter.
It is most suitable where the load and capacitor are switched together. A capacitor left connected after the motor stops can overcorrect the site.
Install automatic power-factor correction
An automatic bank uses a controller to switch capacitor stages in and out as reactive demand changes. It is commonly suitable for factories, cold stores, hotels and other sites with variable plant.
The number and size of stages determine how closely the bank follows the load. A bank made only from large stages may repeatedly overshoot or fail to correct smaller loads.
Use detuned capacitor banks where required
Detuned reactors can reduce the risk of resonance and protect capacitors in installations containing harmonics. The tuning and component ratings must follow measured network conditions.
“Detuned” does not mean that every harmonic issue has been removed. A full harmonic-filter design may still be required.
Use active harmonic filtering where appropriate
An active harmonic filter can inject compensating current and may address both harmonic distortion and reactive demand when designed for those duties. It is generally more complex and expensive than a basic capacitor bank, but may be appropriate for rapidly changing or electronically dominated loads.
Improve equipment selection and operation
Possible operational improvements include:
- Switching off unloaded motors and transformers
- Replacing consistently oversized motors
- Selecting high-power-factor drives and electronic equipment
- Loading motors closer to their efficient operating range
- Correcting failed lighting control gear
- Sequencing plant to avoid unnecessary lightly loaded operation
- Maintaining supply voltage within appropriate limits
Changing production schedules alone does not necessarily remove reactive charges because the threshold is tested within each half-hour rather than only at peak times.
Central, group or individual correction?
| Method | Main advantage | Main limitation |
|---|---|---|
| Central correction at the intake | Simple monitoring and control; can reduce metered kVArh | Does not reduce current in downstream circuits |
| Group correction at a distribution board | Balances cost with some downstream loss reduction | Must follow the group’s changing load |
| Individual correction at equipment | Reduces current through more of the private installation | More equipment to install and maintain |
| Combination of methods | Can optimise large steady loads and variable residual demand | Requires coordinated design and protection |
The best location is not always the nearest available space beside the main switchboard. The design should consider where reactive current flows and which conductors or transformers are constrained.
Solar panels, batteries and reactive power
Behind-the-meter generation can change power factor at the grid meter.
Suppose a site’s inductive equipment still requires 200kVAr, while rooftop solar reduces grid import from 800kW to 300kW. The reactive-to-active ratio seen at the meter rises even though the business is buying less active electricity. Its measured import power factor can therefore deteriorate.
This is an inference from the power-factor formula, and the real result depends on the inverter’s reactive settings, the location of the meter and loads, and the DNO connection agreement.
Some modern solar, battery and drive inverters can technically provide reactive-power support. A business should not assume that this function is enabled, permitted, available at full active output or financially sensible. Manufacturer limits, G99 settings, the connection agreement, warranty, efficiency and control coordination all matter.
A solar or battery project should therefore model kW, kVAr and kVA, not only annual kWh. Read our business solar panels guide for the wider commercial assessment.
How to check a reactive-power charge
1. Identify the supply
Confirm the:
- MPAN
- Meter serial number
- Meter multiplier
- DNO or IDNO
- Connection voltage
- LLFC or DUoS Tariff ID
- Invoice dates
2. Find the contract treatment
Check whether DUoS is fixed, inclusive, pass-through or reconciled. Establish whether the supplier adds any administration component and how credits are handled.
3. Obtain half-hourly data
Request active import, active export, reactive import and reactive export for every settlement interval. Monthly kWh and kVArh totals are insufficient for an exact calculation.
4. Confirm the threshold calculation
For each affected demand half-hour, compare the larger applicable reactive value with active import multiplied by 0.328684. Negative results should become zero rather than offsetting another interval’s excess.
5. Confirm the rate
Use the DNO charging statement covering the invoice period and the correct tariff row. Charges commonly change on 1 April in Great Britain, so one invoice spanning the date may require two rates.
6. Check the arithmetic
Multiply summed chargeable kVArh by the rate in pence and divide by 100 to obtain pounds. Then check VAT and any contractual additions separately.
Read our business energy bill guide for the other invoice fields and codes.
How to dispute a charge
Send the supplier a calculation showing:
- The invoice number and MPAN
- The disputed period
- The LLFC or DUoS Tariff ID used
- The published p/kVArh rate
- Half-hourly AI, RI and RE data
- Meter multipliers
- Your interval-level calculation
- The amount you believe should have been charged
Ask whether the disagreement concerns the meter data, tariff allocation, DNO invoice, supplier contract or arithmetic. These require different corrections.
If reactive data has been estimated, ask for the reason, estimation method and later reconciliation process. Do not remove a charge merely because the monthly-average power factor looks acceptable; the interval calculation may still be correct.
What should a power-quality survey include?
A useful survey should measure or establish:
- kW, kVAr and kVA at the billing meter
- Power factor by half-hour and at finer intervals
- Leading and lagging conditions
- Load variation by shift, weekday and season
- Voltage and current harmonic distortion
- Individual harmonic orders
- Voltage levels and imbalance
- Existing capacitors and control stages
- Transformer loading
- Maximum demand and MIC
- Solar, battery, generator, UPS and drive operation
- Proposed new loads
- Switchboard fault rating and spare capacity
- Temperature and ventilation
- Suitable protection and isolation
Short spot readings can miss intermittent welders, lifts, refrigeration cycles or night-time overcorrection. Monitoring should cover representative operating states.
Comparing power-factor correction quotations
| Quotation item | What to check |
|---|---|
| Survey data | Measurement duration, meter location and operating conditions |
| Existing power factor | Average, minimum and interval distribution rather than one reading |
| Target power factor | Target under full and light load, including leading limit |
| Bank size | Total kVAr and calculation basis |
| Stages | Number and rating of steps |
| Harmonic treatment | Measurements, detuning frequency and component ratings |
| Controller | Measurement method, alarms, communications and settings |
| Switching | Contactors or thyristors suitable for the duty |
| Protection | Fuses, breakers, discharge devices and isolation |
| Enclosure | Ingress protection, ventilation, heat dissipation and location |
| Installation | Cabling, shutdowns, lifting, commissioning and testing |
| Savings | Direct kVArh, capacity, excess and loss savings shown separately |
| MIC assumption | Written confirmation that no unapproved capacity reduction is counted |
| Warranty | Capacitors, reactors, contactors, controller and workmanship |
| Maintenance | Inspection frequency, response time and replacement parts |
| Compliance | Applicable standards, declarations and documentation |
A guaranteed power factor should specify the load range, harmonic conditions and measurement point. A promise of “0.99 at all times” is not meaningful if the plant repeatedly shuts down or exports power.
Maintenance and safety
Capacitor banks contain stored electrical energy and can remain dangerous after isolation. They can also fail through heat, ageing, harmonic overload, overvoltage or inadequate ventilation.
Maintenance can include:
- Visual inspection for bulging, leakage or discolouration
- Checking ventilation and ambient temperature
- Thermal imaging under load
- Testing capacitor current and stage output
- Inspecting contactors, fuses, reactors and terminals
- Confirming controller operation and current-transformer polarity
- Reviewing alarms and communications
- Measuring harmonics
- Confirming discharge time before work
- Comparing current power factor with the commissioned result
The Health and Safety Executive says people working on electrical equipment and installations must be competent for the task, and that work should be planned so both the work and completed installation are safe. See the HSE’s work on electrical equipment guidance and Electricity at Work Regulations guidance.
Do not open, test, modify or manually switch a capacitor bank without the required competence, isolation procedure and awareness of stored charge.
Common reactive-power mistakes
Treating kVArh as wasted kWh
Reactive units are not an equal quantity of active energy that can simply be removed from consumption.
Using monthly totals for an exact bill check
The DNO calculation is normally made for each half-hour and positive results are summed.
Assuming every half-hourly meter is charged
The site’s tariff and billing approach determine whether a separate rate applies.
Counting an MIC reduction before approval
Power-factor correction releases physical kVA, but contractual capacity remains unchanged until the DNO agrees otherwise.
Installing fixed capacitors on variable loads
This can create leading power factor during light-load periods.
Ignoring harmonics
Capacitors can interact with distorted systems and may require detuning or filtering.
Correcting only the full-load condition
The system must also behave safely during weekends, shutdowns, night operation and solar-export periods.
Failing to maintain an existing bank
A bank can appear energised while several stages have failed, allowing charges to return gradually.
Assuming no separate line means no cost
Reactive and capacity costs can be incorporated into an inclusive price or affect future quotations.
Reactive-power reduction checklist
Before approving a project, confirm that:
- The site actually pays a direct reactive charge or has another quantified kVA constraint.
- At least several representative weeks of interval data have been reviewed.
- The correct DNO tariff and rate have been identified.
- Current and target power factors are measured at the billing point.
- Leading and lagging conditions are both understood.
- Harmonic measurements have been completed where relevant.
- Solar, batteries, UPS equipment and drives are included in the model.
- The proposed kVAr bank follows the changing load.
- Protection, fault level, ventilation and shutdown requirements are included.
- Direct reactive, excess-capacity and MIC savings are shown separately.
- Any MIC reduction is treated as conditional on DNO approval.
- The quotation includes commissioning and post-installation verification.
- A maintenance plan and safe isolation procedure are provided.
- Savings will be checked against actual half-hourly bills after installation.
Frequently asked questions
It is a network charge for reactive energy above the permitted threshold. For many site-specific half-hourly LV and HV tariffs in Great Britain, reactive energy becomes chargeable when it exceeds approximately 32.87% of active energy in a half-hour, corresponding to power factor below 0.95.
kVArh means kilovolt-ampere reactive hour. It measures reactive energy accumulated over time. It is different from kVAr, which measures reactive power, and kWh, which measures active energy converted into useful work, heat or light.
A stable power factor between approximately 0.95 and unity normally avoids direct excess-reactive charges under the common Great Britain threshold. Many businesses target around 0.97–0.99 to provide margin without risking leading overcorrection. The correct target depends on the installation and load variation.
It is the common CDCM boundary for separate reactive-power charges, but it is not a universal promise for every UK tariff. Exact calculations, rounding, EHV methodology, Northern Ireland arrangements, private networks and supplier contracts can differ.
For a simple AC load, power factor equals active power in kW divided by apparent power in kVA. It can also be calculated from active and reactive power: PF = kW ÷ √(kW² + kVAr²).
At 0.95 power factor, reactive power divided by active power is tan(cos⁻¹ 0.95), which equals 0.328684 or 32.87%. Charging documents commonly round this to 33%.
No. Separate charges most commonly affect site-specific half-hourly LV and HV supplies. Smaller aggregated supplies may not show a distinct kVArh rate, and an inclusive supplier contract may incorporate the cost elsewhere.
Yes, where it removes chargeable kVArh, prevents excess-capacity charges, supports an approved MIC reduction or reduces internal losses. The actual saving depends on interval data, the DNO rate and contract treatment.
It generally does not reduce the useful kWh required by equipment. It reduces reactive demand, current and kVA. Some active-energy saving may arise from lower cable and transformer losses, but it should be measured rather than assumed.
The basic estimate is kW × [tan(cos⁻¹ existing PF) − tan(cos⁻¹ target PF)]. A specialist must then account for load variation, harmonics, voltage, switching, protection, ventilation and future equipment before selecting a bank.
Yes. Excess capacitance can produce a leading power factor during light load. This can cause voltage and network problems and may still create reactive charges. Automatic stepped correction is often used where demand varies.
They can improve motor control and displacement power factor, but their rectifiers may produce harmonics. Performance varies by drive design. A true power-quality measurement is required rather than assuming that every VSD solves the site’s problem.
They can reduce active import at the meter while some inductive reactive demand remains. This raises the reactive-to-active ratio and may worsen import power factor. Inverter capability, settings and the connection agreement determine the actual result.
Some battery inverters can provide reactive-power control, but the feature may be limited, disabled or restricted by the DNO agreement. Its use can affect inverter capacity and losses. Technical and contractual approval is required.
No. It reduces measured kVA for the same kW, but MIC is a contractual capacity. A business must request a change and the DNO must approve it. Reducing MIC too far can create excess-capacity charges if demand later rises.
There is no safe universal interval. It depends on manufacturer instructions, loading, harmonics, temperature, environment and previous findings. A competent person should establish a risk-based inspection and maintenance programme.
You can make an estimate if power factor is stable, but the normal calculation uses every half-hour. Accurate verification requires half-hourly active import, reactive import and reactive export data plus the correct tariff rate.
Final verdict
Reactive power charges are a controllable business electricity cost, but the separate kVArh line is only part of the financial picture.
For many site-specific half-hourly LV and HV supplies in Great Britain, reactive energy above approximately 32.87% of active energy in each half-hour is chargeable. That boundary corresponds to a power factor of 0.95.
The direct p/kVArh cost can reach thousands of pounds a year at an energy-intensive site. Poor power factor can also occupy connection capacity, cause excess-capacity charges and restrict expansion. Conversely, a claimed capacity saving is not real until a breach is avoided or the DNO agrees a lower MIC.
The correct process is to obtain half-hourly active and reactive data, identify the exact DNO tariff, measure harmonics and load variation, and compare correction options using separate savings categories. A properly designed system can eliminate excess reactive charges and release useful kVA. A poorly selected capacitor bank can create leading power factor, harmonic resonance, overheating and unsafe equipment.
Businesses should therefore treat power-factor correction as an electrical-engineering project supported by a verified bill calculation, not as a box selected from a single monthly reading.
