If you’re a large market customer, you’re charged for demand in the electricity network charges section of your electricity bill.

This demand charge is for the maximum kilowatt (kW) or kilovolt-amps (kVA) that a network distributor has made available to cover peak loads of your operations on each site. This is calculated based on your power usage pattern. If this buffer of electricity supply sits idle, you’re still charged a fee for it being available to you.

Choice Energy could help you reduce these demand charges. We’ll review your recent bill and assess your power factor at each site. We’ll then help you take control of your electricity supply by installing and showing you how to use power factor correction equipment.

Power Factor With Inverters

What is power factor?

Your power factor is a measure of how efficiently all the equipment at your site uses the electricity supplied by the network distributor. It is the ratio of the working power (kW) your equipment at your site is actually using, to the power (kVA) the network distributor has allocated to your site to ensure there is enough power to keep your business running through those peak loads.

Your mobile phone data plan is a simple analogy of the power factor issue. The mobile data you actually use, is like your working power or kW, and your mobile phone plan commitment of $49 per month, is like your kVA ¾ the amount of data your mobile phone provider is giving you access to. You may pay for 30GB of data every month, but only use 20GB of data. Yet, you’ll be billed the full $49 you’ve committed to. In this case we would aim to reduce your charges by a third and only pay for the 20GB, or $32.


If you have lots of peak loads (spikes of kW usage) unevenly spread throughout the operational day, your power factor will be poor. This means your network distributor is supplying you with access to more power than you’ll need. And you’ll pay a charge for that privilege.

If your load is spread more evenly, your power factor is good. This means your network distributor can supply you with access to enough power, but not too much.

Achieving a good power factor is where your Choice Energy consultant can help you take back control.

Pay less with power factor correction

You can install power factor correction equipment to manage the extra reactive power you may need, putting the control of your energy back in your hands.

Your Choice Energy consultant will show you how to use the equipment to optimise your energy efficiency and pay less for demand charges.

Power factor correction is an important part of your overall energy solution.

Improve your power factor. Use less, pay less.

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Take power back and reduce your energy costs. Provide us with a snapshot of your business and energy needs and we'll be in touch.