Some cost implications of electric power factor correction and load management

M. Phil.Presently, ESKOM is rated as the fifth largest utility in the world that generates and distributes electricity power to their consumers at the lowest price per kilowatt-hour (kW.h). As a utility, ESKOM is the largest supplier of electrical energy in South Africa and is currently generating and distributing on demand to approximately 3000 consumers. This represents 92% of the South African market. ESKOM was selected as the utility supplying electrical energy for the purpose of this study. ESKOM's objective is to provide the means and systems by which the consumer can be satisfied with electricity at the most cost-effective manner. In order to integrate the consumers into these objectives, ESKOM took a decision in 1994 to change the supply tariff from active power (kW) to apparent power (kVA) for a number of reasons: To establish a structure whereby the utility and the consumer can control the utilisation of electrical power supply to the consumer. To utilise demand and control through power factor correction and implementation of load management systems. To identify some cost implications of electrical power factor correction and load management. Consumers with kW maximum demand tariff options had little or no financial incentives to improve their low power factor (PF) by reducing their reactive current supply. Switching to (kVA) maximum demand will involve steps to be taken to ensure that the reactive component is kept to a minimum with maximum power factor. ESKOM has structured various tariff rates and charges with unique features that would accommodate the consumers in their demand side management and load cost requirements, which, when applied, will result in an efficient and cost effective load profile. These tariffs are designed to guide consumers automatically into an efficient way of using electrical power, as it is designed to recover both the capital investment and the operating cost within two to three years after installation of power factor correction equipment. ESKOM's concept of Time-of-use (TOU) periods for peak, standard and off-peak times during week, Saturday and Sunday periods is discussed as load management. Interruptible loads can be scheduled or shed to suit lower tariff rates and to avoid maximum demand charge. The concept of load management will change the operation pattern of the consumer's electricity demand whereby the consumer will have immediate technical and financial benefits. In the last chapter of this dissertation, a hypothetical case study addresses and concludes on some of the technical and cost implications of electrical power factor correction and load management as a successful and profitable solution to optimize electrical power supply to the consumer. By implementing the above, ESKOM ensures that the consumer utilizes the electrical power supply to its optimum level at the lowest cost per kilowatthour (kW.h) generated