Features Money Sense
Power factor correction

Learn how to reduce your hydro bill

February 17, 2023  By Bonny Koabel, CGA, CPA

Power factor penalties and surcharges could be driving up your hydro bills. Photo © By Ghost / Adobe Stock

In the print industry it is important to analyze all variable costs, and then find ways to reduce and minimize them.

What is power factor?

In some provinces, power factor is used to determine delivery charges on hydro bills. Power factor is the ratio of actual energy used divided by the amount of energy your company uses at peak demand, called reactive power. This number varies between 0 and 1 and is displayed as a percentage (0 to 100 per cent) on your hydro bill.


When your power factor is below 100 per cent, your facility is drawing both reactive power and real power. However, the hydro charges (cents per KWh) applied to your account only reflects the cost of providing your facility with the real power you have consumed.


Poor power factor quality may be caused by surges from turning on equipment and machinery that have power transformers and electric motor driven loads (i.e. starting up printing presses and packaging machinery in a facility). Also, equipment that does not use a consistent supply of electricity, such as variable speed drives and compressors, computers, compact fluorescent and LED lighting, electrical chargers, and induction furnaces, may also contribute to low power factor. Another cause is poor quality in areas often referred to as “dirty power”.


Most hydro companies begin billing a company power factor surcharges once the factor is below 90 per cent. The first 10 per cent of extra electricity required is free of charge.

The lower a company’s power factor, the more a company pays for hydro, and the surcharges increase rapidly. If your power factor is 87 per cent, you pay a surcharge of four per cent. However, if the power factor drops to 77 per cent for example, the surcharge is 16 per cent.

Correcting power factor

If your facility is experiencing low power factor, you should contact an electrician specializing in dealing with power factor upgrades. Here are some recommendations for improving power factor:

Install capacitors – Capacitors are recommended when the low power factor is the result of power surging from turning on electrical motors. Capacitors produce a leading power factor to counteract the power surge.

Harmonics filters – They may be needed if the cause is non-linear load.

Load rating – Sometimes operational changes are all that are needed to improve power factor. For example, you can operate a motor closer to the full-load rating.


There are many reasons for improving power factor such as:

  • reducing electricity bills;
  • enhancing equipment operation; and
  • reducing transformer maintenance or upgrades. 

Bonny Koabel, CPA, CGA, is president of AKR Consulting Canada that specializes in government grants and subsidies. She can be reached via email at

An edited version of this article originally appeared in the January/February 2023 issue of PrintAction.

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