Power factor correction: when it pays on a South African tariff, and how to size the saving from your bill

Power factor correction is worth doing when your bill carries a charge per kVA of demand or per kVArh of reactive energy. Your power factor must also be low enough to raise the charge. Power factor is the ratio of real power in kW to apparent power in kVA. Motors, transformers and welders draw reactive power that raises the kVA without doing useful work.^[1][8]

Power factor correction is the supply of that reactive power from capacitors on site. The capacitors are usually an automatic capacitor bank at the main switchboard or a sub-switchboard. Less reactive power is then drawn through the meter. An industrial electrician designs and installs the bank.^[8]

The South African Distribution Network Code also sets a floor. A customer with demand above 100 kVA must keep its power factor at no less than 0.9 lagging. The customer must not let it go leading unless the distributor agrees. The customer must also inform the distributor before installing shunt capacitors to comply (section 6.3, version 6.2 of January 2022).^[6]

A tariff that bills only kWh gives no saving on the bill from correction, because neither the kVA nor the kVArh is priced.^[1][4]

On Megaflex, the national utility charges for reactive energy in excess of 30% of the kWh recorded in the peak and standard periods. Megaflex is its time-of-use tariff for urban customers with a notified maximum demand above 1 MVA. The booklet equates that excess to a power factor of 0.96 or less.^[1]

The excess on Megaflex is worked out per 30-minute integrating period and added up for the month. The charge applies only in the high-demand season, from 1 June to 31 August. The 2026/27 rate is 34.49 c/kVArh excluding VAT (39.66 c/kVArh including VAT). The 2025/26 rate was 31.71 c/kVArh. The low-season rate is zero.^[1][2]

Miniflex is the time-of-use tariff for urban customers with a notified maximum demand from 16 kVA up to 5 MVA. On Miniflex, the excess is measured against 30% of the kWh for the entire billing period, using the period totals. The charge again applies only in the high-demand season. The 2026/27 rate is 15.02 c/kVArh excluding VAT. The 2025/26 rate was 13.81 c/kVArh.^[1][2]

The national utility's 2026/27 charges for non-local authority supplies run from 1 April 2026 to 31 March 2027. The National Energy Regulator of South Africa (NERSA) approved an average increase of 8.76% for direct customers.^[1][3]

Of the tariffs read for this page, the highest 2026/27 reactive energy rate is the City of Mbombela's Nyala LT tariff at 53.54 c/kVArh. The lowest is Miniflex at 15.02 c/kVArh. All rates exclude VAT and are charged in the high-demand season only. Mbombela's schedule was approved on 29 May 2026 and is in force from 1 July 2026. The schedule states its tariffs exclude VAT.^[1][2][5]

Sources:^[1][2][5]

Most municipal large-user tariffs bill a demand charge in rand per kVA of the highest measured demand in the month. A better power factor lowers that charge directly, because the same kW draws fewer kVA. Some tariffs also bill a capacity charge per kVA of notified maximum demand. The capacity charge changes only when the notified figure is changed.^[4][5]

The City of Cape Town's 2026/27 Large User Low Voltage Time of Use tariff charges R254.76 per kVA of measured demand per month excluding VAT. The rate is R292.97 including VAT. The 2025/26 charge was R234.69. Notified maximum demand adds R39.00 per kVA. The City of Cape Town's medium-voltage tariff charges R82.38 per kVA, up from R75.89.^[4]

In the City of Mbombela, the 2026/27 Nyala LT time-of-use tariff charges R132.86 per kVA of maximum demand, measured over 30-minute intervals. The tariff also charges R115.70 per kVA of notified demand. Both rates exclude VAT.^[5]

On the national utility's Megaflex tariff, the distribution network demand charge is levied on the chargeable demand. The chargeable demand is the highest average kVA in the month's peak and standard periods. The 2026/27 charge is R52.65 per kVA below 500 V. From 500 V to below 66 kV it is R26.29 per kVA. Both rates exclude VAT.^[1]

The highest 2026/27 demand rate per kVA of measured demand is Cape Town's low-voltage time-of-use tariff at R254.76 a month. The lowest is Megaflex's network demand charge from 500 V to below 66 kV at R26.29. Both come from the charges read for this page and exclude VAT.^[4][5][1][2]

Sources:^[4][5][1][2]

Work the saving from twelve months of bills or half-hourly meter data, in two parts: the demand charge and the reactive energy charge. In practice, an electrician sizes the bank from the measured kW and the power factor before and after correction.^[1][8]

For a demand charge, divide the month's peak kW by the present power factor to get the kVA billed. Divide it by the target power factor to get the kVA after correction. The difference, multiplied by your tariff's rand per kVA, is the monthly saving on that line.^[4][5]

For the reactive energy charge, take the kVArh billed in excess of 30% of the qualifying kWh in June, July and August. Multiply that figure by the 2026/27 rate. On Megaflex and Miniflex, the charge is zero from September to May. The yearly saving on that line therefore comes from three months.^[1]

Divide the installed price of the bank by the yearly saving for the simple payback. Treat the VAT the same way as the tariff figures. The capacitors, their switching and the upkeep below are the costs to set against the saving.^[1][8]

Specify a detuned capacitor bank where the site has harmonic sources. One maker's installation instructions say detuned banks are used in networks where harmonics are generated. Examples of sources are DC drives, inverter drives, UPS equipment, arc furnaces and arc-welding equipment.^[8]

A detuned bank puts a reactor in series with each capacitor step so that the step resonates below the lowest strong harmonic. One maker's rating sheet for a 50 Hz reactor at 7% detuning gives a resonance frequency of 189 Hz. The 189 Hz figure sits below the 5th harmonic at 250 Hz.^[9]

The same installation instructions advise against using standard capacitor banks and detuned banks or filters on a network fed by the same transformer. The instructions also say a supplier using ripple control for tariff and load control needs banks with blocking reactors. Blocking reactors stop the supplier's signals being absorbed.^[8]

In practice, ask for a harmonic measurement at the main switchboard before the design. The choice between a standard bank, a detuned bank and a filter then rests on measured levels. A site that adds drives later can turn a standard bank into a resonance risk.^[8][6]

A capacitor bank needs a first service two to three months after start-up and then a service about once a year. The schedule comes from one maker's installation and maintenance instructions. Before any work, the instructions require the supply to be switched off. The instructions also require at least 5 minutes for the capacitors to discharge. Each capacitor's terminals are then short-circuited.^[8]

The yearly service in those instructions covers:^[8]

• the tightness of wire connections and the condition of fuses;^[8]
• the operation of the controller, contactors and fans, and the air filter;^[8]
• a capacitance reading on every capacitor with a capacitance meter;^[8]
• a check of capacitor casings for bulges and other signs of an internal fault, with any damaged capacitor replaced.^[8]