Power Factor Penalty Karnataka: KERC Rules, APFC Panel Sizing

Power factor in one paragraph

Motors, compressors, welding sets and transformers draw two kinds of current: the part that does work (measured in kW) and a part that only builds magnetic fields (reactive power, in kVAR). The meter and the cables carry both. Power factor is the ratio of real power to total power (kW divided by kVA). A PF of 0.75 means you draw a third more current than the work needs. That extra current heats your cables, loads the transformer and, in Karnataka, adds a surcharge to your bill.

0.85minimum PF for LT-3, LT-4, LT-5, LT-6 motive power

0.90minimum PF for HT consumers

2 paiseper unit for each 0.01 below 0.85 on LT, max 30 paise

3 paiseper unit for each 0.01 below 0.90 on HT

The KERC rules

The KERC tariff order of March 2025 keeps the power factor limits that have applied since the 2005 tariff order.

	LT (LT-3, LT-4, LT-5, LT-6 where motive power is used)	HT
Specified PF	0.85 lag	0.90 lag
Surcharge	2 paise per unit for every 0.01 below 0.85	3 paise per unit for every 0.01 below 0.90
Cap	30 paise per unit	No cap stated in the schedule
Capacitors missing or undersized at inspection	30 paise per unit surcharge (LT-3, LT-5, LT-6 motive power)	Consumer's own responsibility to maintain 0.90
How PF is measured	Average PF recorded by the tri-vector or smart meter for the billing period, or kWh divided by kVAh, worked to 3 decimals and rounded to 2

Karnataka bills energy in kWh, not in kVAh, and the tariff order has no bonus for a PF above the limit. For HT consumers the bigger cost of a poor PF is often hidden in the demand charge, because demand is billed in kVA.

For LT installations without a tri-vector or smart meter, if a test shows PF below 0.85 even after the specified capacitors are fitted, the ESCOM gives three months' notice and then levies the surcharge until you install more capacitors and inform them in writing. For metered IP sets with capacitors, there is a rebate of 2 paise per unit; IP sets without the right capacitors face ₹100 per HP per year.

What a poor power factor costs: two examples

Example	Working	Monthly cost
LT-5 workshop, 5,000 units, PF 0.78	0.85 minus 0.78 = 7 steps × 2 paise = 14 paise per unit	About ₹700 surcharge
HT factory, 1,00,000 units, PF 0.85	0.90 minus 0.85 = 5 steps × 3 paise = 15 paise per unit	About ₹15,000 surcharge
Same HT factory, 400 kW peak	400 kW at 0.85 PF is about 471 kVA; at 0.97 it is about 412 kVA. Difference about 59 kVA at ₹365 per kVA	About ₹21,000 more in demand charges, if recorded demand is above 90% of contract demand

The demand charge rate used is the HT-2(a) figure reported after the March 2026 review. A well-maintained APFC panel for a plant of that size often pays for itself within months, but get the numbers from your own bills.

Finding your power factor on the bill and meter

Before buying anything, find out what your PF really is and when it is bad.

The bill: LT commercial and industrial bills from tri-vector or smart meters show the average PF, or the kWh and kVAh readings. Divide kWh by kVAh to get the PF. A PF surcharge line confirms you are below the limit.
The meter display: tri-vector and smart meters cycle through readings that include instantaneous PF, maximum demand and kVAh. Note them at different times of day.
Load survey: for HT and large LT consumers, the ESCOM can download the meter's load survey, which shows kW, kVA and PF interval by interval. Ask your subdivision or engage a contractor with a meter reading instrument.
A power quality analyser on the main incomer for a week shows PF, harmonics and voltage together. It is the best basis for sizing an APFC panel.

Look for patterns. Many units have a good PF during full production and a poor one at lunch, at night or on holidays, when lightly loaded motors and transformers draw magnetising current with little real load. The billing PF is an average, so those quiet hours drag it down. That is why automatic switching usually beats fixed capacitors in a plant whose load changes through the day.

Sizing capacitors and APFC panels

The required capacitor rating is:

kVAR = kW × (tan φ1 − tan φ2), where φ1 is the angle at your present PF and φ2 at the target PF.

Present PF	Multiplier to reach 0.95	Multiplier to reach 0.99
0.70	0.69	0.88
0.75	0.55	0.74
0.80	0.42	0.61
0.85	0.29	0.48
0.90	0.16	0.34

Example: a 40 kW load at 0.75 PF needs about 40 × 0.55 = 22 kVAR to reach 0.95. Use the maximum demand and the average PF from the meter's monthly data, not the total of nameplates.

Fixed capacitors at each motor suit small LT units with a few motors that run steadily. Size them to the motor's no-load magnetising current so the motor cannot self-excite when switched off. The Conditions of Supply (Clause 23) sets minimum ratings for motors and IP sets.
An APFC panel suits loads that change through the day. It has a controller that switches capacitor steps in and out. Pick steps in ratios such as 1:2:4 so it can follow the load finely, for example 5, 10, 20 and 20 kVAR for a 50 kVAR panel.
Transformer compensation matters for HT consumers. The transformer's own magnetising kVAR is drawn even at no load, so many plants fit a fixed capacitor on the LT side of the transformer, sized to its no-load reactive power.
Choose capacitors rated for 440 V or 480 V on a 415 V system, so normal overvoltage does not shorten their life.

Harmonics: why some APFC panels fail

VFDs, UPS systems, LED drivers, induction furnaces and EV chargers inject harmonic currents. Plain capacitors offer a low-impedance path to these currents and can resonate with the transformer. The signs are capacitors that swell or fail within months, fuses blowing in the APFC panel, a humming transformer and PF readings that jump around.

Measure total harmonic distortion of current and voltage with a power quality analyser before buying a panel for a plant with many drives.
Where harmonics are significant, use a detuned APFC panel with series reactors (commonly 7% or 14%), or an active harmonic filter for heavy non-linear loads.
IEEE 519 is the usual reference for harmonic limits at the point of supply. Ask your ESCOM if it has set any limits for your connection.

Surcharge still on the bill after fitting an APFC panel?

This is one of the most common calls we get from factories and commercial buildings. The panel is installed, the controller shows 0.98, and the bill still has a PF surcharge. Work through the causes in this order:

Finding why the PF surcharge has not gone

1Compare the bill PF with the controller display
Note the meter's average PF or kWh ÷ kVAh for the same period. The controller shows only the moment you look at it.
?Is the controller's CT on the main incomer, upstream of the capacitor feed?
Yes Go to the next checkNo Move the CT; the controller cannot see the real load or its own correction
?Are all steps working and in auto mode?
Yes Go to the next checkNo Replace failed capacitors or fuses; switch the controller back to auto
?Has the load changed since the panel was sized?
Yes Re-measure and add kVAR or a detuned panelNo Ask the ESCOM to check the meter
✓PF on the next bill at or above the limit

Some practical notes. Capacitors lose kVAR as they age, so a panel that was right three years ago may now be undersized. Many plants run the APFC panel on generator supply too; capacitors on a lightly loaded DG set can push it into leading power factor and overvoltage, so most installers interlock the panel to switch off on DG. Our DG set approval guide covers the changeover arrangement.

If everything on your side checks out and the bill still disagrees with your own measurements over several months, write to the subdivision with the readings and ask for the meter, and on HT the CTs and PTs, to be tested. Our guide to bill complaints and meter testing explains the escalation route.

Practical checks every quarter

Checklist0 / 8 done

Read the average PF on the last three bills and the meter display
Open the APFC panel with the power off and look for bulging or leaking capacitors
Check each step's current with a clamp meter against its rated kVAR
Check the controller's CT is on the correct phase and facing the right way; a wrong CT is the most common fault
Check the controller target PF (0.97 to 0.99 lag is a sensible setting)
Make sure the panel is not over-correcting at night or on holidays, when load is low
Clean filters and fans; capacitors fail early when the panel runs hot
Replace failed steps with the same voltage rating and reactor type

Over-correction is a real problem. When load drops in the evening and fixed capacitors stay connected, PF goes leading. Depending on how the meter records kVAh, leading reactive power may also lower the PF used for billing, and it can push voltage up. Ask your ESCOM how your meter treats leading PF. If you are setting up a new unit, read our industrial connection guide and size the capacitors from day one.

Check the official source

Tariffs, schemes and ESCOM procedures change. This article explains how things work in practice as of October 2026. Before you pay, sign or buy equipment, confirm the current rule on the KERC website (kerc.karnataka.gov.in), your ESCOM website (BESCOM, MESCOM, CESC Mysuru, HESCOM or GESCOM), at your subdivision office, or on the helpline 1912.

Questions

What is the minimum power factor for LT consumers in Karnataka?

0.85 lag for LT-3, LT-4, LT-5 and LT-6 installations where motive power is used. Below that, a surcharge of 2 paise per unit is levied for each 0.01 drop, up to 30 paise per unit.

What is the power factor penalty for HT consumers in Karnataka?

HT consumers must keep an average PF of 0.90. For each 0.01 below 0.90, a surcharge of 3 paise per unit is levied.

Is there an incentive for high power factor in Karnataka?

The KERC tariff order has no bonus for a PF above the limit, but a better PF lowers kVA demand charges for HT consumers and reduces losses and heating in your own wiring.

Does Karnataka bill on kVAh?

No. Karnataka bills energy in kWh. PF is worked out from the meter's average PF or the ratio of kWh to kVAh, and the surcharge is added per unit.

How do I calculate the capacitor size for my load?

Multiply the load in kW by the difference between the tangent of the present PF angle and the target PF angle. For example, 40 kW at 0.75 needs about 22 kVAR to reach 0.95.

Why do capacitors in my APFC panel keep failing?

Common causes are harmonics from drives and UPS systems, overvoltage, heat inside the panel and wrong CT connections. A detuned panel with reactors is often needed where there are many drives.

Why is there still a PF surcharge after installing an APFC panel?

The usual causes are a CT in the wrong place, failed or aged capacitors, a controller left in manual mode, or new loads added since the panel was sized. Compare the bill PF with your own measurements before suspecting the meter.

Sources

Rules and figures in this article were checked against these sources on 30 Sep 2026. Schemes and tariffs change, so confirm with the official office before you act.

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Written by the Basavalalith Electricals engineering teamLicensed electrical contractors working on ESCOM, KPTCL and CEIG projects across Karnataka, from Bengaluru and Mysuru to Mangaluru, Hubballi and Kalaburagi.

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Power factor penalty in Karnataka: KERC rules, APFC panels and how to size capacitors