Capacitors lower electrical costs two ways: In many areas, the electrical
rate includes a penalty charge for low power factor. Installation of power
capacitors on the electrical distribution system within a facility makes it
unnecessary for the utility to supply the reactive power required by inductive
electrical equipment. The savings the utility realizes in reduced generation,
transmission, and distribution costs are passed on to the customer in the
form of lower electrical bills.
The second source of savings derived through the use of power factor
correction capacitors is in the form of increased KVA capacity in the electrical
distribution system. Installation of capacitors to furnish the non-productive
current requirements of the facility makes it possible to increase the
connected load by as much as 20 percent without a corresponding increase
in the size of the transformers, conductors, and protective devices making up
the distribution system which services the load.