Answer Posted / ajay pratap singh

The significance of power factor lies in the fact that utility
companies supply customers with volt-amperes, but bill
them for watts. The relationship is (watts = volts x amperes x
power factor). It is clear that power factors below 1.0
require a utility to generate more than the minimum volt-
amperes necessary to supply the power (watts). This
increases generation and transmission costs. Good power factor
is considered to be greater than 0.85 or 85%.
Utilities may impose penalties on customers who do not have
good power factors on their overall buildings.

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