Some Considerations for Designing a Reactive Power Charge

Nhlanhla Mbuli
Department of Electrical and Electronic Engineering, University of Johannesburg, Johannesburg, South Africa mbulin@eskom.co.za

Abstract: Electricity tariffs that levy charges for electricity usage on the basis of only active power demand (in kW) and/or active energy (in kWh) do not offer customers incentive to control their reactive power demand (in kVAr) and/or reactive energy consumption (in kVArh). The consequence is that poor power factor, for the entire system, may result, leading to the degradation of the power system, The introduction of tariffs that have an apparent power charge (in kVA) does go some way in incentivizing customers to deal with their reactive power consumption, as this type of charge encourage them to improve their power factors.. However, further improvement in the utilization of power systems can be realized by having a tariff that directly charges for reactive power. In this paper, results of a survey on international practices on levying a reactive power charge to the customers are discussed. Key words: Power factor, active demand charge, active energy charge, reactive demand charge, reactive energy charge.

performance. In the case of Eskom Holdings State-Owned Company (SOC) Limited, for example, historically, the supply contracts stipulated that the customer power factor must be equal to or greater than 0.85 lagging and must never lead. Enforcement of these limits has been problematic as there has been no financial implication for the customer when the limits are exceeded. As part of the information gathering in evaluating the feasibility of introducing reactive power charges, Eskoms Distribution Pricing and System Operator Departments commissioned a literature review aimed at scanning the international practices on various aspects of dealing with reactive power charges, and, in particular they wanted the following questions to be addressed: Leading power factor considerations. What are international practices in terms of restrictions/limits on customer leading power factor? Do other utilities allow customer power factors to go leading? If so, by how much and under what conditions (if any), and do utilities differentiate between different customer types/sizes? Are customers charged/penalized for leading power factor? Power factor range. What is the range of power factor that is acceptable? Levying of charges. How are charges levied if power factor limits are encroached and what other sanctions are in place if there is violation? Determining reactive power. How is power factor for billing purposes determined?

I.

INTRODUCTION

A basic electricity charge to customers is normally in the form of active energy consumed (i.e., kWh). For larger customers, a capacity charge is also levied for the network capacity required to supply the customer. This is often in the form of a demand charge, and is based on the maximum real power (i.e., kW) which the customer required during the billing period. Since the supply of real power often requires that reactive power also be provided to operate the power system properly, a demand charge based on apparent power (i.e., kVA) is also often introduced, in the place of active demand charge, to somehow incentivize customers to take charge of the reactive power they draw from the system. Over time, electricity utility companies have learnt that the kVA demand charge may not be strong enough a signal for customers to reduce the reactive power drawn from the power system to the absolute minimum. On the other hand, , the System Planning and Operation Departments find that poor customer power factors generally lead to a network with lower than otherwise would have been the case had customers maintained reasonable power factors. The end result of this is that the utility, because of poor power factor caused by customer, may have to invest in infrastructure soon than would have been necessary to ensure acceptable power system

This paper presents the results of the literature scan conducted to respond to the questions above. Section II of the paper gives a short overview of reactive power issues in power systems. Section III describes the methodology followed in conducting the literature scan. In Section IV, the findings of the literature review are presented, and Section V concludes the paper by summarizing the key conclusions.

II. SUMMARY OF REACTIVE POWER ISSUES IN POWER SYSTEM Reactive power supports [1] the magnetic and electric fields and is therefore necessary in order for power system equipment to operate. Apparent power, with units of (kVA), is a measure of how big the system must be built in order to supply a given load, i.e., to cater for active (kW) and reactive (kVAr) power requirements. Power factor is simply the ratio of active power to apparent power, i.e., Power Factor =

an under-excitation limit is imposed. Utilities, therefore, do become wary if the whole system becomes excessively leading. From the foregoing discussion, and as depicted in Figure 1 below, it is clear that lagging power factor is not always good or bad, and so is leading power factor. Where networks experience low voltages, and capacitive reactive power is in short supply, it is sensible to reward customers who supply capacitive reactive power and to penalize those who consume it. The opposite is true for networks where there is abundant capacitive reactive power. Some networks will benefit from leading power factor (e.g., networks where low voltages are prevalent), while others will benefit from lagging ones (e.g., network in which high voltages are prevalent).

kW ..... [1] kVA

The highest possible power factor is 1.0, meaning all the capacity available is used to transmit active power and no reactive power is flowing. This is the desirable, highest efficiency level of operating the system, and at any power factor less than 1, leading or lagging, the power system must be built larger in order to serve the load. To obtain the best possible economic advantage from electric power, both the utility system and the end users should operate their facilities at highest efficiency possible. Primary sources of reactive power include transmission lines (due to capacitive charging), capacitor banks (series and shunt connected), and synchronous machines (overexcited motors and generators). Any installation with the following equipment is likely to consume a lot of reactive power: induction motors (constitute greatest industrial loads on utility systems), electronic converters (reactive power required for the conversion process), transformers and heavily loaded transmission lines (due to inductive reactance), etc. Both leading and lagging reactive power could pose problems to the power system [2, 3, 4], such as: Excessive voltage drop when power factor is lagging and severe voltage rise, with impact on equipment insulation and flashovers when power factor leads. The flow of both leading and lagging reactive power increased system losses due to increased total current flow in the system. Similarly to above, the loading of equipment increases when any reactive power flows in the system. Stability of the power system is also of concern here. With excessive lagging power factor, voltage stability limits could be much less than otherwise. Machines connected to power system with leading power factors have to be operated with very low excitation levels to allow them to absorb reactive power. However, there could be concerns with the stability of machines, unless

Figure 1 Values used [5] in the calculation of power factor Surcharge

Each of the forthcoming sections of this report will summarize the findings of the literature scan into the various questions raised on various aspects of reactive power charges. III. METHODOLOGY OF THE STUDY The literature scan was conducted primarily by accessing information located in websites of various electricity utility companies. The scan involved a desktop study in which the internet was scanned, including visiting websites of various companies, for relevant information. The scan was conducted as a desktop study, and no discussions were entered into with the companies. The company information accessed included, among others, tariff handbooks and pricing policies. Generally, the detail of information was often not at a level deemed and details to obtain total insight, but the information obtained enabled one to have some idea of how various matters were dealt with. It was decided that the scan will investigate utilities around the world to gain a global and broad perspective. Information from four of the continents was found. The choice of utilities investigated was guided by availability of relevant information and uniqueness of approach. Table 1 provides the details of utilities studied for various continents.

Table 1 Changes in system losses with CSP plant integration.

Scenario
North America

MW Reduction
Black Hills Power, Southern California Edison, Colorado Springs Utilities, and Montana-Dakota Utilities Company (all in USA), and BC Hydro (Canada). Tasmania, ActeWagl, Victoria New South Wales, and Western Australia China, National Electric Power Company (Jordan), Tamil Nadu Electricity Board (TNEB) (India), and Tata Power Company Limited, India EdF and Scottish Power

lower. In certain utilities [27], certain incentives are provided for if power factor, lagging or leading, is maintained above a certain value. In addition to voltage level at which supplies are taken by customers, other entities also factor in the size of the customer [19, 8, 9] in determining allowable power factor range. Lower power factor allowed at lower voltages, for smaller customer as opposed to higher voltage, bigger customers Some jurisdictions [25] do not specify any range of allowable power factor. Their approach is to charge the customer for the maximum reactive power (MVAr) demand. C. Billing for reactive power.

Australia (states) Asia

Europe

IV. RESULTS The results of the study are presented in the subsections that follow below. The findings are grouped in accordance with the specific questions raised during the scoping phase. A. Leading power factor considerations Some utilities do not make reference to leading power factor in their pricing-related publications [6], but do provide information related to lagging power factor. This seems to imply that leading power factor is not catered for, i.e., customers are prohibited from allowing a leading power factor to occur. Some electricity utility companies explicitly prohibit customers from having leading power factors [7, 8, 9, 10, 11, 12, 13, 14, 15]. In the documentation of one entity [Southern California], the utility states provides for using a ratchet mechanism which prevents a meter form reversing at leading power factors, thereby excluding leading reactive power (kVAr) values. A number of companies [16, 17, 18, 19, 20, 21] do provide for their customers having both leading and lagging power factors, B. Power factor range Some entities [6, 22, 23, 7, 10, 11, 12, 13, 14, 15] specify lagging power factor that customers should maintain. Other entities [16, 17, 18, 24] that provide for both leading and lagging power factor values stipulate that these should not be less than certain stipulated values. In addition to allowing the power factor to range between stipulated leading and lagging values, some electrical utilities specify allowable ranges according to the voltage level at which customers take their supplies. Here, power factor values for customers taking supply at lower voltage [20] are allowed to go

The approach taken in some of the utilities is to apply a reactive power surcharge to the bill that increases as the power factor becomes worse [22, 26, 24, 20, 27]. This surcharge is calculated on the basis of the reactive energy consumed during the billing period. In some utilities, charges for the poor power factor calculated based on the cost/MVAr [25], and these are levied for the maximum reactive power demand (MVAr) recorded for the billing period. There are situations in which utilities levy a R/MVAr charge for all reactive power demand above a certain percentage of active power demand [18], which is a way of charging for power factor that is poor (e.g., charge for all reactive power above 30% of active power demand, means charge for any power factor below 95%) In some utilities, provision is made for supply to the consumer to be disconnected [12, 13, 22] by the utility until power factor is restored to stipulated levels.

D. Determining Reactive Power

Some utilities work with the average lagging power factor, where leading reactive power is prohibited, and they work this out as the quotient [25, 22, 21] obtained by dividing the kilowatt-hours used during the month by the square root of the sum of the squares of the kWh and kVArh used for the month, i.e.,

kWh 2 2 kWh kVArh

[2]

Others utilities use worst power for the month, which they determine by measurement over any period of not less than 15 minutes under conditions determined to be normal. If the measured power

factor is less than a stipulated value [20] at the point of delivery, reactive power charges become applicable.

[21] [22] [23] [24]

V. CONCLUSIONS The idea to charging for reactive power and power factor is realistic and has been implement in various jurisdictions across the globe. Utilities have implementing reactive power charges as a further signal to their customers to improve efficiency of supply by reducing capacitive reactive power drawn from the grid. Although there are clear mechanisms in various utilities, specifics on how these are operationalised vary, e.g., utilities have set limits for power factor, but the ranges vary. Utility-specific approach is required and will be influenced, e.g., by customer types and energy usage patterns, etc.

[25]

[26] [27]

The Tata Power Company; Schedule of Electricity Tariffs; 1 June 2008. BC Hydro; Electric Tariff; 30 May 2008. Victoria; Electricity Distribution Code; Section 6: Supply Characteristics and Supply Use; 2005. Electricity Tariff Instructions; Tariff of Electrical Energy supplied from the National Electric Power Company (NEPCO) to the Distribution Licensees and Harraneh Broadcasting and T.V.; 2005. Fellows, D. A.; Modification to Power Factor Adjustment Special Condition; Southern California Edison January 2000. Guo, L., Cheng, Y., Zhang, L., Huang, H.; Research on Power -Factor Regulating Tariff Standard; CICED 2008 The Tata Power Company; Schedule of Electricity Tariffs; 1 June 2008.

REFERENCES
[1] EPRI Power System Dynamics Tutorial (1001983); Active and Reactive Power; Chapter 3; Revision 2; 1998. Bonneville Power Administration; Industrial Power Factor Analysis Guidebook; March 1995. Kundur, P.; Power System Stability and Control; McGraw-Hill, Inc; 1993. Berube, G.R., Hajagos, L.M., Beaulieu, R.E.;A Utility Perspective on Under-Excitation Limiters; IEEE Transactions on Energy Conversion, Vol. 10, No. 3, September 1995, pp 532-537. Lively., M.; Wide Open Load Following: Mark Livelys Approach to Pricing Reactive Power; December 2004. Website link is http://wpweb2.tepper.cmu.edu/ceic/SeminarPDFs/Livel yReactiveCMU.ppt#19. Black Hills Power; South Dakota Commercial Electric Rates; 01 January 2007. New South Wales; Service and Installation Rules of New South Wales; January 2009. ActeWagl; Service and Installation Rules for Connection to the Electricity Distribution Network; March 2007. ActeWagl; ActeWagl Distribution Schedule of electricity network charges 2009-2010. Western Australia Electrical Requirements; July 2008. Western Australia; Price List; December 2009. Scottish Power Energy Networks; Methodology Statement Detailing the Basis of Scottish Power Distributions Use of System Charges; 1 October 2007. EdF Energy Networks; Agreement for Connection to the EdF Energy Networks (EPN) plc. Distribution System; April 2007. New South Wales; Service and Installation Rules of New South Wales; January 2009. Scottish Power Energy Networks; Methodology Statement Detailing the Basis of Scottish Power Distributions Use of System Charges; 1 October 2007. Colorado Springs Utilities, Electric Rate Schedules, January 2010. Colorado Springs Utilities, Colorado Springs Utilities Electric Line Extension & Service Standards; 2010. Montana-Dakota Utilities Company; State of Wyoming Electric Rate Schedule; May 2009. Aurora Energy; Service and Installation Rules for Connection to the Electricity Distribution Network in Tasmania; 1 October 2007. Tariff Details; Tamil Nadu Electricity Board (TNEB), India; 2008.

[2] [3] [4]

[5]

[6] [7] [8]

[9] [10] [11] [12]

[13]

[14] [15]

[16] [17] [18] [19]

[20]