If You Still Think KEPCO's Power Factor Threshold Is 90%, It Changed

Power factor is the quietest line on the bill. The amount does not look large and nobody explains it, so many plants let it pass for years. Yet this line is applied as a percentage of the whole basic charge, so the bigger a plant's basic charge, the bigger the cost of leaving it alone.

What is power factor?

Power factor is the share of the electricity arriving at your plant that actually does work. It is active power divided by apparent power, and it is usually written as a percentage.

Equipment with coils in it — motors, welders, transformers — creates and collapses magnetic fields, and in doing so produces a share that never turns into work: reactive power. The larger that share, the lower the power factor.

Why does a low power factor mean paying more?

Because when reactive power grows, KEPCO has to provide heavier equipment to get the same work done. So KEPCO adjusts power factor directly through the tariff.

Under Article 43(1) of the Terms, the power factor charge applies to customers with a meter installed that can measure reactive power, and who is covered depends on the voltage.

Where it lands matters too — it is added to or taken off the basic charge as a percentage, not the energy charge, so you need to know how the basic charge is calculated to gauge the size of it.

Is the reference power factor 90% or 92%?

It is 92%. The widely circulated "90% power factor reference" does not match the current Terms. Article 43(2) of the Basic Terms of Supply in force from 1 February 2025 sets the daytime lagging power factor reference at 92% and the night-time leading power factor reference at 95%.

Material that says "lagging 09:00~23:00 / leading 23:00~09:00" is from a version before the amendment.

Measurement is done in 30-minute intervals (Article 42(2) of the Terms). These 30-minute values are averaged over the month to set the charge, but caps and floors are applied before the average is taken.

On the lagging side, anything below 60% is treated as 60% and anything above 97% as 97% (Article 43(2), item 1(b)); on the leading side, anything below 60% is treated as 60% and intervals that are in fact lagging are treated as 100% (Article 43(2), item 2(b)).

Customers supplied at low voltage and customers without remote metering have their power factor calculated not from 30-minute intervals but from the value accumulated on the meter over one month (the proviso to Article 42(2)).

The two groups are separate — if you are on low voltage you fall here regardless of whether you have remote metering.

How much is the power factor charge?

0.2% of the basic charge for each percentage point away from the reference. The unit step is the same for the surcharge and for the reduction.

A worked example — a plant whose basic charge is KRW 3 million a month, taken as an assumption.

When an additional charge arises, the first month is only a notice of the charge to come and it is actually billed from the second month (Article 43(3) of the Terms). If a notice has appeared on your bill, that means you have a month's grace.

Which is larger, the discount or the surcharge?

The surcharge is far larger. At the extremes the difference is close to sevenfold. The reduction stops at 97%, while the surcharge runs all the way down to 60%.

So describing power factor improvement as "going to collect a discount" makes people misjudge the size of it. Strictly, it is about stopping a fine you have been paying, and the 1.0% reduction is a bonus that follows afterwards.

Why is night-time power factor treated separately?

Because at night the load falls away while the capacitors stay connected, so the power factor crosses over to the other side. That state is leading power factor, and it carries a surcharge with no reduction (Article 43(2), item 2 of the Terms).

However, the leading power factor charge does not apply to customers supplied at low voltage or to customers without remote metering (Article 43(2), item 2(c) of the Terms — the customers covered by the proviso to Article 42(2)).

If you are on low voltage there is no night-time leading surcharge whether you have remote metering or not. So the night-time leading problem is in practice a problem for plants at high voltage and above.

Where do we check our plant's power factor?

On the power factor lines of the monthly electricity bill, and in the usage data KEPCO provides. The power factor charge is billed as an addition to or reduction of the basic charge, so start by looking for the surcharge or reduction entry in the billing detail.

To see the values at 30-minute resolution you have to obtain the data from KEPCO yourself. The route for that is set out in how to obtain KEPCO usage data.

You have to look at day and night separately to tell whether the problem is on the lagging or the leading side.

Does fitting capacitors always make things better?

No. Fit too many and the loss grows. Put in generous capacity to fix the daytime lagging power factor and, at night when the load drops away, it crosses over into leading power factor, and you pay several times the reduction cap of 1.0% as a surcharge.

On top of that, ending up with a leading power factor because capacitors beyond the appropriate capacity have been installed is a ground for suspension of supply under the Terms (Article 45(3), item 8 and Article 41 of the Terms).

Some outfits sell power factor correction equipment as "a device that cuts your electricity bill by 20%", but as the tables above show, the money that moves with power factor is a few per cent of the basic charge.

We worked that arithmetic through further in do power-saving devices work, and it is worth reading alongside the point that power factor is one line among several in the structure of the industrial electricity tariff.