kVAh Based Billing Structure

Industrial load is mainly inductive and needs reactive power in addition to active power for its functioning. Active power is consumed by the loads to perform intended work like motion, heat or light whereas reactive power is used to provide electromagnetic field in the inductive equipment. The reactive power consumption for a resistive load is nil as no electromagnetic field is needed for its operation. Reactive power also regulates voltage, improves voltage profile and enhances system stability. Some of the grid failures occur due to insufficiency of reactive power in the system. The reactive power needs can be met either locally at consumer end by installing reactive power system or else it has to be imported from the grid. If the electricity tariff is based on active energy kWh (kilowatt hour) alone then the utility bears the burden of supplying reactive power free of cost. The measures by utilities such as power factor incentives are not very effective in curbing reactive power import from grid by consumers. Alternatively, kVAh (kilo volt ampere hour) billing is more effective and is preferred by utilities. It takes care of both active power consumption as well as reactive power consumption. The measures taken by consumers to optimise electricity bill improve the efficiency of customer installation as well that of utility network besides helping utilities in better utilisation of their installed capacity. There is reduction in heat losses. If correctly designed reactive power systems are installed by consumers there is also an improvement in quality of power. Utilities need approval of Electricity Regulatory Commissions for migrating from kWh billing to kVAh billing. The purpose of this approval is to ensure that the concerns of both consumers and utilities are taken care while changing the billing mechanism.

Scenario in case of kVAh based billing
1. Utilities prefer kVAh billing wherein consumers need to maintain PF close to unity for optimum kVAh consumption. This encourages consumers to generate their own reactive power.
2. Reactive power consumption charges are built in the kVAh tariff regime.
3. PF incentive is built in the tariff structure thus no separate PF incentive is given.
4. Utilities maintain kVAh tariff cheaper than the kWh tariff.
5. The computation of kVAh is based on RMS current and thus Harmonics affect kVAh consumption. The distortion power factor increases with increase in harmonic content which reduces true power factor and increases kVAh consumption.
6. Some utilities have declared migration to kVAh billing but in actual practice they continue to treat leading power factor as unity and the billing remains same as that for kWh regime if the average PF is maintained unity or any leading PF value.
7. To optimise the billing consumers, need to have a relook at their reactive power installation. There has to be less reliance on fixed compensation. Automatic compensation both on LT and HT can only provide optimisation.

Scenario in case of kWh-based billing
1. Utilities supply both active and reactive power. In kWh tariff active power consumption is billed whereas the reactive power supplied by the utilities remains unbilled.
2. The PF incentives are normally available in this tariff regime and this encourages consumers to improve PF and reduce their reactive power consumption. In an ideal case when PF is maintained close to unity the PF incentive is highest and reactive power consumption is negligible. In such a case entire reactive power requirement of load is catered to by the consumer himself by capacitors or other means such as active compensation. The question of charging for reactive power consumption by utilities does not arise as they supply no reactive power lagging or leading to the consumer.
3. If load power factor at a consumer premises is poor and is not improved by consumer the utility has to cater to the reactive power needs of load which requires utility company to strengthen its reactive power installation. The utilities in India charge PF penalty for PF values below 0.9. Wherever the PF incentives are either negligible or non-existent the consumers target for achieving somehow 0.9 PF instead of i=an ideal value of unity. This leaves a very large chunk of reactive power needs of the consumers to be taken care by utility company.
4. The power factor incentive is based on average monthly value which is easier to achieve through a mix of fixed and auto compensation thus enabling consumers to get maximum incentive.
5. Some utilities overlook leading PF values while computing average power factor. This tempts consumers to use capacitors indiscriminately for availing PF incentive but it does more harm than good to the installations of both utilities and of consumers.
6. The low power factor penalties to consumers do not adequately compensate the utilities for unaccounted consumption of reactive energy by consumers.

Scenario in other countries
In oil rich GCC countries the power is surplus and cheap, till recently both PF penalties and PF incentives were non-existent. Thus, there was no encouragement to improve power factor. Similarly, consumers could get away without any penalties even for very low power facto values. After oil crisis a beginning has been made by specifying threshold value below which penalties have been made applicable. Similar is the case in most of the developed countries. The PF values being maintained by consumers are poor. The ROI on reactive power installations is insignificant thus discouraging investment on these systems.

Baldev Raj Narang,
CEO, Clariant Power System Ltd, Pune
Email: baldevrajnarang@clariantindidia.co.in