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Chandigarh, July 28, 2026: Chandigarh Power Distribution Limited (CPDL), has highlighted the importance of maintaining a better power factor to help commercial and industrial consumers optimise electricity costs under the existing kVAh-based tariff framework.
The aim is to create greater awareness among commercial and industrial consumers who are already billed on a kilo-Volt-Ampere-hour (kVAh) basis under the prevailing Tariff Order. It is intended to help consumers better understand how improving their power factor can optimise electricity bills and does not involve any change to the existing tariff, billing methodology or regulatory framework.
According to Brajesh Kumar, Chief Executive Officer, CPDL, “Power factor is a straightforward but often overlooked part of how commercial and industrial consumers are billed under kVAh-based tariffs. We want consumers to understand this clearly, and to know that simple steps such as checking their installation, and where required, using capacitor banks or Automatic Power Factor Correction (APFC) panels can help them manage their electricity costs more efficiently. We also see this as part of building a more efficient and reliable power distribution system for Chandigarh.”
Under the current tariff order, commercial as well as industrial consumers are billed based on kVAh consumption, with electricity meters recording both kWh (actual energy consumed) and kVAh (total energy drawn from the grid). The power factor is determined by the ratio of kWh to kVAh consumption during a billing cycle. A power factor closer to 1.0 reflects more efficient use of electricity, meaning less kVAh is required for the same level of energy consumption, which in turn helps reduce electricity bills.
Consumers can improve their power factor by having their electrical installations assessed by qualified professionals and, where required, installing capacitor banks of suitable capacity or APFC panels. Existing power factor correction equipment should also be checked to ensure it is functioning efficiently.
Illustrating the potential savings, an LT Industrial consumer with an electricity consumption of 1,000 kWh would incur an energy charge of Rs 6,430 at a power factor of 0.70. Improving the power factor to 0.85 would reduce the energy charge to Rs 5,292, while achieving a power factor of 1.00 would bring the energy charge down to Rs 4,500 under the existing tariff. The example demonstrates that improving the power factor can significantly reduce electricity bills without any reduction in actual energy consumption.
Apart from lowering electricity bills, maintaining a higher power factor also reduces technical losses in the distribution network, improves voltage stability and enables more efficient utilization of the electricity infrastructure, benefiting both consumers and the overall grid.
