Don't pay charges you can avoid: get to know your BC Hydro bill

Electricity bill displaying power factor

If you're equipment is drawing too much reactive power, it's costing you

If the finer points of electrical service are not your forte, there's a line on your BC Hydro bill you may be skipping right over.

It's the "Power Factor Surcharge." It's worth a closer look, because it could be an easy place to save money.

Active power vs. reactive power: what are you using?

BC Hydro supplies two kinds of power:

  • Active power (measured in kW), which is used by all types of electrical equipment to deliver required work, and
  • Reactive power (measured in kVAr), which is only required by certain types of equipment, such as those that produce motion (for example, motors), and those containing electronics (everything from computers to fluorescent lights with electronic ballasts).

The trouble is when equipment is drawing too much reactive power. That causes inefficiencies in the electricity transmission system — a bit like making waves in a bathtub that are crashing into each other instead of moving smoothly together. The higher the inefficiency, the more BC Hydro must charge.

How the power factor surcharge works

"We can supply extra reactive power, but only if you need it," says Shuaul Qamar, a team lead with BC Hydro Power Smart, Industrial. "So we provide customers with a little bit for free, but if they need a whole lot, they have to pay for it."

Real power is measured in kilowatts noted as kW. Reactive power is noted as "kVAr", or "kilovars" (measured in kilo volts amperes reactive). You can see where it shows up on your bill by looking at bullet 10 on the online bill "explainers" for Medium General Service or Large General Service customers. (This charge does not apply to residential or Small General Service customers.)

There, you'll see a notation that reads, "kVArh: Power Factor Surcharge." Power factor is the ratio between active power and total (active + reactive) power supplied by any utility. It's expressed as a percentage: 100 per cent is excellent, and the lower the percentage falls, the less effectively your operation is handling its reactive power needs.

BC Hydro starts to charge when your power factor is below 90 per cent. "We supply the 10 per cent for no charge," says Qamar. "But if your equipment is old or it's not up to snuff, it will require more of that reactive power."

The lower your power factor, the more you pay — and the amount goes up rapidly (see table). If your power factor is 87 per cent, you pay a surcharge of 4 per cent on your electricity usage. But if your power factor drops to 77 per cent for example, your surcharge is 16 per cent.

Easy savings, fast payback

Luckily, it's easy to reduce power factor surcharges. In most situations, the key is to install one or more capacitors, either at the specific point where equipment is using reactive power, or where electricity is delivered to your overall operation.

In one case, a steel fabrication plant is now saving $200 per month in electricity charges after installing a single capacitor. You can get advice about capacitors from members of the Power Smart Alliance.

"If you are paying surcharges, you certainly don't need to," says Qamar. "The payback on fixing your power factor can be very attractive and could be as low as one year."

Learn more about your BC Hydro bill and how to save on charges

To locate the various charges on your bill and find out what each of the charges mean, find the bill explainer for your rate structure below or learn more about what rate structure you're under.

Below are more resources to help you learn how to make the most of the information in your BC Hydro bill, to cut costs and save money. If you have questions, call the Business Help Desk at 604 522 4713 (Greater Vancouver) or 1 866 522 4713 (elsewhere in the province), or talk to your Key Account Manager.

Power factor less than  



but 90% or more Nil
90% but 88% or more 2%
88% but 85% or more 4%
85% but 80% or more 9%
80% but 75% or more 16%
75% but 70% or more 24%
70% but 65% or more 34%
65% but 60% or more 44%
60% but 55% or more 57%
55% but 50% or more 72%
50%   80%