Low power factor means poor electrical efficiency. The lower the power factor, the higher the apparent power drawn from the distribution network.
When low power factor is not corrected, the utility must provide the nonworking reactive power in addition to the working active power. This results in the use of larger generators, transformers, bus bars, wires, and other distribution system devices that otherwise would not be necessary.As the utility's capital expenditures and operating costs are going to be higher, they are going to pass these higher expenses to industrial users in the form of power factor penalties and higher utility bills.
