This topic is far from my specialty, but here is the result of a few days research to make sure my ground is firm in response to Scottish Power.

In my pursuit of this, and my interest in magnet motors I came across this fascinating video -

http://www.youtube.com/watch?v=Mj4rV0AoI-Q&feature=plcpNow you’ll note how the Counter (Back) EMF referred to as the ‘Witch’ is denoted as a battery in opposition to the applied voltage. This counter voltage is developed in ‘inductor’ circuits by the alternating current being applied. Batteries are storage elements. Notice also how the example for a 12v supply, the Witch equates to 9v ie. three quarters of the supply voltage.

http://en.wikipedia.org/wiki/Counter-electromotive_forceYou’ll see that ‘inductor’ circuits are also called ‘reactor’.

Energy storage elements such as inductance and capacitance may result in periodic reversals of the direction of energy flow.

https://en.wikipedia.org/wiki/AC_powerReactive power

Reactive power flow is needed in an alternating-current transmission system to support the transfer of real power over the network. In alternating current circuits, energy is stored temporarily in inductive and capacitive elements, which can result in the periodic reversal of the direction of energy flow. The portion of power flow remaining, after being averaged over a complete AC waveform, is the real power; that is, energy that can be used to do work (for example overcome friction in a motor, or heat an element). On the other hand, the portion of power flow that is temporarily stored in the form of magnetic or electric fields, due to inductive and capacitive network elements, and then returned to source, is known as reactive power.

AC connected devices that store energy in the form of a magnetic field include devices called inductors, which consist of a large coil of wire. When a voltage is initially placed across the coil, a magnetic field builds up, and it takes a period of time for the current to reach full value. This causes the current to lag behind the voltage in phase; hence, these devices are said to absorb reactive power.

A capacitor is an AC device that stores energy in the form of an electric field. When current is driven through the capacitor, it takes a period of time for a charge to build up to produce the full voltage difference. On an AC network, the voltage across a capacitor is constantly changing – the capacitor will oppose this change, causing the voltage to lag behind the current. In other words, the current leads the voltage in phase; hence, these devices are said to generate reactive power.

Energy stored in capacitive or inductive elements of the network give rise to reactive power flow. Reactive power flow strongly influences the voltage levels across the network. Voltage levels and reactive power flow must be carefully controlled to allow a power system to be operated within acceptable limits.

Power factor

The ratio between real power and apparent power in a circuit is called the power factor. It's a practical measure of the efficiency of a power distribution system. For two systems transmitting the same amount of real power, the system with the lower power factor will have higher circulating currents due to energy that returns to the source from energy storage in the load. These higher currents produce higher losses and reduce overall transmission efficiency. A lower power factor circuit will have a higher apparent power and higher losses for the same amount of real power.

The power factor is unity (one) when the voltage and current are in phase. It is zero when the current leads or lags the voltage by 90 degrees. Power factors are usually stated as "leading" or "lagging" to show the sign of the phase angle of current with respect to voltage.

Purely capacitive circuits supply reactive power with the current waveform leading the voltage waveform by 90 degrees, while purely inductive circuits absorb reactive power with the current waveform lagging the voltage waveform by 90 degrees. The result of this is that capacitive and inductive circuit elements tend to cancel each other out.

So

the portion of power flow that is temporarily stored in the form of magnetic or electric fields, due to inductive and capacitive network elements, and then returned to source, is known as reactive power.…….The power is returned……9v of 12v supplied in the example.

http://electronics.stackexchange.com/questions/19102/if-the-energy-meter-sees-a-reactive-load-will-it-register-a-lower-readingThe utility's electric meter measures the integral of the voltage times the current, so measures only real energy delivered. The utility doesn't like highly reactive loads because it causes currents in the transmission system, which waste power by I**2 * R losses which they can't bill for. This is why large electric customers get charged in part by the power factor. This is basically a measure of how far off you'd be assuming the product of independently measured voltage and current gave you real delivered power. For a purely resistive load, the voltage and current are in phase and the power factor is 1. That's what the utilities like. The worst case are purely capacitive or purely inductive loads. The voltage and current are 90 degrees out of phase, so no real power is delivered, and the power factor is 0.

In general, the power grid looks somewhat inductive. Utilities combat this various ways. These include banks of capacitors, nagging legistlators to force appliances to have better power factors, and running their generators a little out of phase. The utility term for the latter is "reactive power". In most cases you're actually doing the utility a favor by plugging a little capacitance into your outlet.

For resistive loads (tungsten light bulbs) the power factor is 1, for purely inductive or capacitive loads (reactive – fridge motors etc ) the power factor is 0 (zero) so no ‘real power’ is delivered. Electric meters measure ‘only real energy delivered’.

They don’t like reactive loads because they cant bill for it, even though they get the power back. Does double dipping ring any bells ? If they get it back AND can bill for it then ‘power factor conditioning’ built in makes sense plus WE pay for the expense of buying it built in.

http://boards.straightdope.com/sdmb/archive/index.php/t-476759.html Most modern home appliances that have inductive loads, such as air conditioners and refrigerators, come with power factor conditioning built in.

http://peswiki.com/energy/Directory:Power_Factor_Correction There is truth in the fact that our homes have devices which consume electricity at reduced power factors. As an example we know that "CFL light bulbs" have a Power factor of between 55% and 70%, while incandescent light bulbs have a power factor of 100%. All electric motors, including fridges, air conditioners, fans and computers generate reactive power which will affect a circuits power factor.

Based on the above information it sounds logical that a technology which corrects power factor would save money.

But this is NOT a correct conclusion at all. Improving consumer power factor, assuming the technology works as claimed, has ZERO affect on the amount of money a consumer is charged for electricity.

A reduced power factor does not mean lost electricity, it means that the phase of the electricity has been moved away from the the optimal of 100%. The costs of this inefficiency are real, but they are in the distribution losses to the utility, who must deliver the power and then receive it back. At time of peak demand this can cause extra costs as the utilities bring less efficient equipment on line to meet the demand, but it is a complex topic and one where industrial consumption is a much bigger issue than consumer.

Almost all consumers share a distribution circuit with other home owners. Power factor phase shift is the net of all power phase shift on a circuit. It is quite possible that one home owners phase shift is the correction of another home owners. This is why consumers cannot individually address this issue, it is a matter for the utilities and device manufacturers.

Commercial and industrial supply are a different issue all together, here dedicated circuits are in place, and correcting the power factor directly affects the utility, and savings are allowed. But again, they are distribution adjustments, not 35% savings as might be though from the name "power factor".

So if I have understood this at all, or even slightly, the supplied alternating current develops a counter voltage in the reactor circuit. The reactive power is returned to the supplier but is not metered as the meter only registers ‘real power’. By conditioning the power factor the suppliers can meter more of the power whilst still receiving the delivered power back. Therefore they get their power back to sell it over and over again whilst being able to meter more and more of it and thereby ‘double dipping’