Major Power Factor Charge increases for Vector customers

20 March 2013

Blue sky power pylon iStock_000000888359XSmallLarger Time Of Use (TOU) Vector customers with an existing reactive load problem could get caught on the hop by new electricity charges due to come on line next month.  This cost increase will also impact on the electricity retailer’s medium-sized and small business customers.

The Power Factor (PF) charge, designed to penalise poor power practices, currently stands at 3c/unit of reactive power (kVArh).  This charge will rise to $2.00/unit from April 1st 2013 and then by a further $6.00 to $8.00/unit by next year.  These increases bring their customers into line with standard industry charges say Vector.

The maths:  A small company currently paying $14 per year in PF penalties will be paying over $900 in 2013 and more than $3,600 per annum from 2014 onwards.


Why increase the Power Factor charge?

This ‘new’ charge is not price gouging. It is a necessary measure to fine-tune New Zealand Inc. for productivity and to optimise the power supply network.  Many of the lines companies around New Zealand have been applying this PF penalty for years as have almost all larger electricity clients in Auckland.

Poor power practices create an artificial load on the supply system.  The current charge of 3c per unit is levied on reactive power that is more than 5% out of alignment.  The charge is specifically aimed at customers who draw power in ways that creates an artificial load on the supply system through poor practices.  It is effectively a tax on laziness.


What can you do to minimise charges? 

The simplest way to improve Power Factor is to install a Power Factor Correction unit at your site.  The wrong capacitor for the job is possibly worse than none at all so should be a professional job, not a DIY.

For more information and independent advice on the best PF charge solution for your business, contact TUMG on 09 576 2107 .