Buzzword: Power Factor

What it means. Power factor, a characteristic of alternating-current, or AC, circuits, is defined as the ratio of real power (what the end user consumes, measured in watts) to apparent power (what the utility company supplies, measured in volt-amperes).

Power factor is expressed as a number between 0.0 and 1.0. The higher the number, the better the power factor, with 0.85 and above being considered optimal.

An analogy might be helpful here: Let's say you're at your favorite watering hole and order a $4 pint of beer. To serve you a proper, full pint, the barkeep might end up dispensing a few extra ounces. You're not charged for that spillage—you pay for only the beer in the glass. (Yes, the bar accounts for waste.)

That's basically how things operate between you and your utility: You pay for real power (beer) and not apparent power (spillage). It's a different story at the commercial level, since utility companies may impose a penalty on industrial customers whose facilities have a low power factor. Many utilities will levy a surcharge if a company's power factor is less than 0.95, according to the U.S. Department of Energy. Your utility company would prefer that your home have a 1.0 power factor, since it charges you only for real power

Why the buzz? Power factor is still mainly a concern for industrial clients, but it might creep into the residential sector. One reason for this is the low power factor of compact fluorescent lightbulbs.

For a 60-watt incandescent lightbulb with a 1.0 power factor, for instance, the utility generates 60 volt-amperes and the customer pays for 60 watts of power, according to lighting company Osram Sylvania. But for a 15-watt CFL with a 0.60 power factor, the utility must generate 25 volt-amperes, while the customer pays for 15 watts. (To get volt-amperes, divide watts by power factor.)

So when that 0.60-power-factor CFL over the course of time uses 1 kilowatt-hour of electricity, the utility would have to generate 1,667 volt-amperes to power it. (It costs American utility companies an average of 4 cents to produce a cost of a kilowatt-hour of electricity, according to the Edison Electric Institute.) Note that the average home has an overall power factor of about 0.90.

When you factor in the hundreds of billions of kilowatt-hours used by U.S. households each year, you can see why power companies would love to pass on some or all of the additional costs associated with power factor on to their customers.—Daniel DiClerico | e-mail | Twitter | Forums | Facebook

Essential information: Check out these easy ways to cut energy use at home and learn about watt meters, which are marketed as energy-saving devices.

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